UK tax burden highest in half a century: TPA report

By Ellen Daniel

The UK tax burden is the highest it has been for 49 years, according to a recent report.

Tax burden is the amount of tax paid by a person, company, or country in relation to the country’s total income. Currently, tax burden makes up 34% of UK Gross Domestic Product (GDP), totalling around £724.9bn.

This is the highest the UK tax burden has been since since 1969-70, when it was 35% of GDP.

The report by TaxPayers’ Alliance (TPA), a think tank that campaigns for a low-tax society, found that government revenues are at a 32-year high, at 37% of GDP, with the government spending approximately £30,000 per household this year.

This increase has been attributed to a need for greater spending on the NHS, defence and education. New taxes such as a tax on chocolate, higher inheritance tax, higher council tax and an increase in income tax have been proposed as ways of raising additional funds.

Research by chartered accountants UHY Hacker Young also found that £28bn has been raised in new taxes since the credit crunch.

TPA proposals to cut the UK tax burden

However, The TPA has called on the government to avoid tax hikes that will affect families and businesses the most, and instead re-prioritise existing budgets. This follows previous research by the pressure group that found that the lowest-earning 10% of employees in Britain pay around 49.5% of their income in tax.

Furthermore, the TPA has said that it is wrong to assume that the only way to raise more revenue would be to increase tax, arguing that reducing tax rates can sometimes bring in more revenue.

It cites the example that corporation tax receipts have increased by 25% in real terms after headline rates came down from 28% in 2010-11 to 19% in 2017-18.

Chief executive of the TPA John O’Connell believes that poorer families have been hit hardest by tax increases:

“Families and businesses are being squeezed under the highest tax burden in nearly 50 years. The gradual increase of taxation and the introduction of new taxes have hit poorer families the hardest, leaving them with less and less at the end of the month to pay for life’s necessities.

“The funding models for social care and the NHS need real reform, not ever higher taxes. Instead of taking even more money away from families and businesses, the government should consider cutting taxes, or reducing spending in other areas.”