Sunday, March 19, 2006
Tax and spend
The next time that Labour politicians accuse the Liberal Democrats of being a high-tax party and highlight the prudence of the Chancellor of the Excehequer, then throw these figures from an Ernst and Young study back in their faces:
An analysis by the accountants Ernst & Young, based on the Treasury’s own figures, shows the chancellor will match the record high for the tax burden this year and rise above it next year.
That means it will be higher than in the 1970s under Denis Healey, when the top rate of income tax was 83%, and the early 1980s, when it was 60%.
Brown will unveil his 10th budget on Wednesday, which Treasury sources say will be an exercise in “consolidation”.
The Ernst & Young analysis shows that the tax burden excluding North Sea oil revenues, the best measure of the load faced by families and businesses, will be 37.6% of gross domestic product this year, close to the 37.7% peak reached in the early 1980s.
Next year it will reach 37.8%, before rising to 38.1%
As always with these things it is what you do with the money that is important in maintaining public support for certain tax levels. However, with expenditure by the Government on the Iraq War at £3 billion and rising, then it is going to be more and more difficult to justify these tax levels to the electorate without a clear idea as to how much longer we must maintain our commitment to a military presence there.
The cost of this war certainly puts the NHS debt (about £700m in England and Wales) and the income from student fees (about £1 billion from top-up fees) into perspective.
An analysis by the accountants Ernst & Young, based on the Treasury’s own figures, shows the chancellor will match the record high for the tax burden this year and rise above it next year.
That means it will be higher than in the 1970s under Denis Healey, when the top rate of income tax was 83%, and the early 1980s, when it was 60%.
Brown will unveil his 10th budget on Wednesday, which Treasury sources say will be an exercise in “consolidation”.
The Ernst & Young analysis shows that the tax burden excluding North Sea oil revenues, the best measure of the load faced by families and businesses, will be 37.6% of gross domestic product this year, close to the 37.7% peak reached in the early 1980s.
Next year it will reach 37.8%, before rising to 38.1%
As always with these things it is what you do with the money that is important in maintaining public support for certain tax levels. However, with expenditure by the Government on the Iraq War at £3 billion and rising, then it is going to be more and more difficult to justify these tax levels to the electorate without a clear idea as to how much longer we must maintain our commitment to a military presence there.
The cost of this war certainly puts the NHS debt (about £700m in England and Wales) and the income from student fees (about £1 billion from top-up fees) into perspective.
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I very much agree with you Peter. The statistic (linked to yours above) that truly staggered me was the following:
Taxation Revenue 1997: £270 billion
Taxation Revenue 2005: £490 billion
I'm no expert, but I just cannot understand where £220 billion has gone!
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Taxation Revenue 1997: £270 billion
Taxation Revenue 2005: £490 billion
I'm no expert, but I just cannot understand where £220 billion has gone!
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