X

Create an account to continue reading.

Registered readers have access to our blogs and a limited number of magazine articles
For unlimited access to The Spectator, subscribe below

Registered readers have access to our blogs and a limited number of magazine articles

Sign in to continue

Already have an account?

What's my subscriber number?

Subscribe now from £1 a week

Online

Unlimited access to The Spectator including the full archive from 1828

Print

Weekly delivery of the magazine

App

Phone & tablet edition of the magazine

Spectator Club

Subscriber-only offers, events and discounts
 
View subscription offers

Already a subscriber?

or

Subscribe now for unlimited access

ALL FROM JUST £1 A WEEK

View subscription offers

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating an account – Your subscriber number was not recognised though. To link your subscription visit the My Account page

Thank you for creating your account – To update your details click here to manage your account

X

Login

Don't have an account? Sign up
X

Subscription expired

Your subscription has expired. Please go to My Account to renew it or view subscription offers.

X

Forgot Password

Please check your email

If the email address you entered is associated with a web account on our system, you will receive an email from us with instructions for resetting your password.

If you don't receive this email, please check your junk mail folder.

X

It's time to subscribe.

You've read all your free Spectator magazine articles for this month.

Subscribe now for unlimited access – from just £1 a week

You've read all your free Spectator magazine articles for this month.

Subscribe now for unlimited access

Online

Unlimited access to The Spectator including the full archive from 1828

Print

Weekly delivery of the magazine

App

Phone & tablet edition of the magazine

Spectator Club

Subscriber-only offers, events and discounts
X

Sign up

What's my subscriber number? Already have an account?

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating an account – Your subscriber number was not recognised though. To link your subscription visit the My Account page

Thank you for creating your account – To update your details click here to manage your account

X

Your subscriber number is the 8 digit number printed above your name on the address sheet sent with your magazine each week.

Entering your subscriber number will enable full access to all magazine articles on the site.

If you cannot find your subscriber number then please contact us on customerhelp@subscriptions.co.uk or call 0330 333 0050.

You can create an account in the meantime and link your subscription at a later time. Simply visit the My Account page, enter your subscriber number in the relevant field and click 'submit changes'.

Please note: Previously subscribers used a 'WebID' to log into the website. Your subscriber number is not the same as the WebID. Please ensure you use the subscriber number when you link your subscription.

Coffee House

The Daily Mirror has missed the real scandal: the tax on the low-paid is 84pc, not 36pc

11 July 2013

9:01 AM

11 July 2013

9:01 AM

Today’s Daily Mirror has exposed half a scandal: that the tax changes under this government have hit the poor harder that the rich. That’s what you get when you jack up VAT: it hits everyone, but will hit the poor proportionally harder. But this year, the lower-paid half of British workers will be asked for less than 10pc of all income tax collected, the lowest proportion ever. The richest 1pc will contribute almost 30pc, the highest in recorded history. Osborne is actually squeezing the rich harder than any Labour Chancellor ever did (that’s what you get when you cut the top rate of tax). The ONS yesterday published figures suggesting that the top 20pc pay 35pc of their income in tax, and the poorest 20pc pay 36pc, when all taxes etc is considered. That tiny difference is enough for it to justify a cover story.

But here is the real scandal. If you’re doing low-paid, part-time work – and many millions have no choice but to do that – then the government will impose a de facto tax rate of up to 84pc on extra earnings depending on your circumstances. Here’s an example:-

Screen-Shot-2012-12-16-at-12.18.45-582x400

[Alt-Text]


Screen-Shot-2012-12-16-at-12.18.38-574x400

Would you do extra work at a 84pc tax rate? I know I wouldn’t. No wonder immigrants (who get to keep most of the extra money they earn) are still coming in such numbers. The fault does not lie with lazy Brits but a cruel and purblind welfare system which is being reformed far too slowly. The above graph shows the real situation confronting Daily Mirror readers and others, yet it is never replicated by governmental authorities. Its a graph that shows a deeply inconvenient truth. As a result, our political leaders are – in the most part – blind to this hideously unfair system which is still, three years into the government, keeping the poor down. In fact, if you look at it a certain way, some marginal rates are as high as 98pc. David Cameron once said something to say about this.

“Thirty years ago this party won an election fighting against 98 per cent tax rates for the richest. I want us to show even more anger about 98 per cent tax rates for the very poorest in our country!”

Precious little sign of that anger now. Osborne has lowered the marginal rate for the rich, and it has worked. The effective marginal tax rates confronting the poor, meanwhile, are higher than ever. There doesn’t seem to be as much urgency.

This, of course, is the problem which Iain Duncan Smith’s Universal Credit is intended to solve. That is why it’s so sad that the project is moving at such glacial pace. It has never been more urgently needed.

PS Ryan Bourne, my colleague at the CPS, gives his take here. And here’s what the 1pc pay in tax, over the years:-

Screen Shot 2013-07-11 at 10.18.58

Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.


Show comments
Close