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Monday, April 27, 2015

How the rich have been paying more tax under the coalition government

Those naysayers who insist to me on a regular basis that the coalition government favours the rich over the poorest in our society may well have to think again if this Financial Times article proves to be correct.

The paper says that people earning more than £2m a year, a small enough group to fit into the Royal Albert Hall, more than doubled their share of income tax to 5 per cent in the past five years.

They add that the growing reliance on the wealthy for revenues is set to continue after the election, with top earners facing reduced tax breaks for pensions and, if Labour leads the next government, a potential 5p rise in the top rate of income tax to 50p and a “mansion tax” on expensive property:

The number of taxpayers with incomes over £2m surged to 5,000 between 2010-11 and 2014-15, pushing up revenues from this group from £3.5bn to £8.9bn, according to estimates from HM Revenue & Customs.

The figures show the responsiveness of the wealthy to changes in tax rates: more income was reported when the 50p rate introduced in 2010 was cut by 5p in 2013. They also fuel uncertainty about the impact of future tax rises.

The paper reports that tax payments are already highly concentrated, with about half of income tax revenues coming from just 3 per cent of adults, although the other main taxes, value added tax and national insurance, are much less skewed to high earners.

Another little known fact to conclude: a millionaire paid £381,000 more tax on their income between 2010 and 2015 than they did in the Labour years 2005 to 2010.
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