How much have the poor been taxed under Gordon Brown (see also posting below)? He portrays himself as a great friend to the poor and has created complicated tax credits to help them. How big has that help been?
I have just been directed to some figures published by Reform which were based on the Government’s publication, Economic Trends.
In 1997/98, those people in the bottom income quintile had a very susbstantial 39.2 per cent of their income removed in tax. But after five years of the generosity of Mr Brown, in 2002/03, how much was removed? 39.0 per cent. So the poorest gained 0.2 per cent of their incomes. That was less than the average gain of the other four quintiles.
The figures include National Insurance but not, I believe, the taxation of dividends within pension funds. In any case, the figures suggest that Mr Brown’s self-praise over his treatment of the poor is much exaggerated.
It also suggests that the bulk of his tax-raising has been focused elsewhere.
How, one might wonder, does he manage to extract such a large proportion of the incomes of the poor? Through indirect taxation -VAT, duties on cigarettes, alcohol, petrol and so on. These are taxes which the Labour Party used to decry as ‘regressive’ because they take up a higher proportion of the incomes of the poor than the rich. But now that Mr Brown relies on these ‘regressive’ taxes to remove income from the poor, the Labour Party seems to find nothing objectionable about them at all.