You are going to have pay more tax.

by John Darvall

In the west, Bath and North East Somerset have revealed that they are looking to cut spending on early years provision by £2.3 million over the next two years. Bristol City Council is now facing further budget cuts of £90 million on top of what they have already have cut. Central Government will also have to cut more public services and welfare if the country is ever likely to pay back the debt. All rather bleak isn’t it?

Does it have to be like this? Could you pay more?

There are a number of painful realities we all need to face here. If you or the country borrow money then you have to pay it back. The only way to do that is by using the money you earn to do it. If you don’t earn enough you either prioritize your income so you pay what you’ve borrowed back or you have to earn more money to do it. The reality is hard and, for many, very difficult but there is no other way, other than to extend the length of time you pay the debt back. This will always cost you more money.

There are those who think public services are a right and public money grows on trees. There answer is to tax the wealthy more to pay for it. The trotting out of ‘tax the bankers bonuses more’ is a very popular solution offered to the public spending shortfall. That, like the idea of the Big Society, is utter tosh.

If you want an NHS that does what you want and when you want it you have to pay for it. If you want trains with seat you can sit on, at times you want to go then you have to pay for it. If you want local services, real and proper care for your elderly relatives or loved ones, decent schools or the rubbish collected on time then you have to pay for it. And there are only two ways. Either you pay more tax, buy it yourself or you give more to charity. We all have to pay more or give more. It’s worth remembering that less than 100 years ago charity provided health care, education, social mobility and social care before central government decided it could do it better.

HMRC have released some figures that don’t sit well with the silly cries of bankers paying more tax on their bonuses or with the premise of the big society filling in the gap. Out of almost 30 million people now working just 703,000 people will earn at least £100,000 or more this year through wages, bonuses, self-employed income, dividends, rents and interest. Of those, 320,000 will make at least £150,000 and 287,000 of these will pay the 45p top rate. This IS loads more than the 236,000 that paid the 50p tax rate in 2010-11.

This may surprise you too. Just 18,000 people will earn over £1m, which is up on the 13,000 in the previous two years and it was 10,000 in 2010.

But this is the killer number to the argument that rich need to pay more income tax than you. The 6,000 people on £2m or more will pay more in income tax (£13.2bn) than you and the 12.5m other taxpayers who earn under £20,000 a year. They are coughing up less with cumulative £11.5bn.

Simply, the top 1 per cent of UK earners have 13.7 per cent of all income but they pay a record 29.8 per cent of all income tax. In 2004-05, the top 1 per cent paid 21.4 per cent of all income tax. So who is taxed more and paying more? It is certainly not the 2 million more who will pay no tax at all in the next year compare to last year.

One last thing; these top earners are most likely to buy the services they need and are paying tax to the government for those who can’t. So should these top pay more tax? Your answer to that is most likely to be yes, but then you should pay more tax too if you want the things that are being cut. Or maybe we should hand it all over to charities to provide as it use to be.

One last thing. £35 billion in tax goes uncollected every year.

Painful, isn’t it.

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