Working for the state

December 24, 2006 Labour No comments
! This post hasn't been updated in over a year. A lot can change in a year including my opinion and the amount of naughty words I use. There's a good chance that there's something in what's written below that someone will find objectionable. That's fine, if I tried to please everybody all of the time then I'd be a Lib Dem (remember them?) and I'm certainly not one of those. The point is, I'm not the kind of person to try and alter history in case I said something in the past that someone can use against me in the future but just remember that the person I was then isn't the person I am now nor the person I'll be in a year's time.

Since Labour came to power in 1997 and installed the Tartan Taxman as Chancellor amid claims that everyone would be better off under New Labour, the tax burden has increased significantly and we now work well over half the year solely for the benefit of the Treasury.

Income Tax has now increased to 23.6p in the pound which is 6.7% more than it was last year.  This doesn’t include national insurance which is currently 11p in the pound if you earn up to £645 per week and 1p in the pound for anything over the £645.  Income Tax is charged at 40p in the pound for anything you earn over £32,400 (rising to £33,300 next year).

Let’s use an example of someone earning £33,800 per year, an average wage for middle management in middle England.

Salary: £33,800 (£650 per week)
Allowance: £5,035
Taxable Pay: £28,765

Despite having a tax-free allowance of £5,035 per year the whole salary is used to calculate your tax bill so the 40% tax threshold will be met.

Standard Rate Income Tax: £7,646
Higher Rate Income Tax: £560
Standard Rate National Insurance: £4,025
Lower Rate National Insurance: £3

Gross Tax Bill: £12,234
Net Tax Bill (Gross Tax Bill – Allowance): £7,199

So, for someone earning a salary of £33,800 they can expect to hand almost 22% of that straight over to the Treasury before they see a penny of it.

But that’s not all the Tartan Taxman takes off you.  When you pay for your gas and electricity (and even coal) you pay 5% VAT.  When you buy pretty much anything – good or services – you will pay 17.5% VAT on it.  Then there’s tax on petrol, diesel and LPG – 13.4% VAT and around 42% duty on petrol.  You pay tax if a relative dies and leaves you a decent inheritance.  You pay tax if you buy a house for more than £120k.  You pay tax when you sell a house.  You pay tax if you give your children or grandchildren a gift of more than £100 in a year.  You pay tax if you save money in the bank.  You pay tax if you pay into a pension.  You pay tax if you claim a pension.

What does Labour have to say about this ever-increasing tax burden?  They say that every person will be £1,000 better off next year on average thanks to the tax credits system.  The tax credits system is so complicated that even the people who work for HMRC can’t tell you how it works and it requires 10’s of thousands of staff and millions of pounds just to keep it ticking over.  Where is the sense in taking a quarter of someone’s salary and then paying thousands of people to administer a system to give most of it back?  A large proportion of people on tax credits receive more than in tax credits than they pay in tax making the system even more pointlessly expensive – for people in this situation, why not just not tax them in the first place?

One thing is for sure, New Labour may have abandoned pretty much every socialist ideal they may have had but they’ve kept the important one – everyone should be as poor and heavily burdened by the state as everyone else.

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