31 July 2009

A telling post by Richard Murphy on his always interesting Tax Research UK blog . He publishes and comments on parts of the Office of National Statistics (ONS) data showing how taxes and benefits affect different income-groups of people in Britain in 2007/08. His Table 3 is most informative. Income tax and national insurance contributions are largely progressive; but indirect taxes are largely regressive, that is they take a larger share of income as one moves down the quintiles of income groups to the poorest. Council tax is regressive too.

The original full ONS paper, The effects of taxes and benfits on household incomes, 2007/08, is here .

I share Murphy’s views that the present redistribution through taxes and benefits is insufficient. I think that while we have to encourage effort and discourage unnecessary dependency we also have to balance material rewards for the enterprising with help for those at the bottom. At present the balance is wrong, more should be done for the poor, and it is disappointing that the Labour governments of Blair and Brown have been in effect indifferent to this injustice. Do I need to add that these tax and benefit policies affect people in Cornwall?