Thursday, 23 April 2015

The UK Economy. Part one: individuals' incomes and the taxes they pay.

It's easy for the right and even many so-called centrists in the UK to reduce tax. Once people have paid income tax, national insurance, council tax, VAT, other duties (e.g. on fuel and alcohol) etc, their pay is significantly lower than the raw sum at the top of their payslip. So tax cuts always go down well and the public don't seem particularly enraged if the highest earners are those benefiting the most.

So what do we pay for?

  • Hospitals
  • Ambulance Services
  • GPs
  • Community Nurses and Care Workers
  • Police
  • Defence
  • Education
  • Roads
  • Transport*
  • Energy and Water*
  • Child Protection
  • Street Cleaners, Environmental Health and Waste and Recycling Services
  • Benefits such as the state pension, job seekers' allowance, child benefit, incapacity benefit etc.
  • Ministers who decide on how to manage the above

*These services have been privatised but infrastructure and upkeep always requires more public money.

The above list is not exhaustive: it costs a lot to run a country. In the UK we pay lower taxes than the majority of developed countries and as a result, we often have good reason to complain about the services we receive. But still, people just see the bottom line of their pay slips and the added on taxes elsewhere and feel ripped off.

But we need council workers making sure shops and takeaways are selling us food that won't make us ill. We need people to clear up after unscrupulous companies who fly-tip their waste to save a few quid. We need benefits to help anyone out of work (I've been there; it's not all shirkers despite what the media try to tell you) to eat and continue paying their bills until they find a job. We need the police to prevent crime and Schools to teach us skills to give us a good chance of a decent life. We need to fork out for improvements to railway lines and power networks because the companies making huge profits providing these services can't reach into their pockets (because their pockets are in far-flung tax havens). We need care workers to look after us if we need help with everyday tasks. And what is so important is that we need to pay good money for all of these things, otherwise standards will fall.

Too often, councils can't afford to clear up the mess left by lazy, cheap people (I walk through woods every morning past tonnes of dumped rubbish). And Schools are too often falling into disrepair. Right now, waiting times in A&E are as bad as they've ever been. Care workers are paid so little, it's really difficult to get good people to stay in the job. Pay generally is too low in the public sector and perversely, in-work benefits top up their wages to they can afford to live in the area they work. Where's the sense in that?!

So we need to pay taxes and the government's overall tax revenue needs to be higher than it currently is. But this government has cut tax for the lowest earners and the highest earners. Why? The highest earners have a great deal of influence over government policy. And the highest earners often employ the lowest earners so if the government reduces the tax the lowest paid earn, the influential employers needn't worry about increasing the poverty wages. Simple. So, in this way as in so many others, the state is effectively subsidising the big profit-making companies and individuals who often help to fund the 'think-tanks' who tell us the state is bloated and needs to be reduced!

If only people knew more about why some parties are so anti-tax and who really benefits, they might be happier to pay it and be more critical of their employers than they are of the 'tax man'.

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