Prestige Wealth Solution - Britain's Tax Burden Almost at Highest in Four Decades
As the general elections creep closer in June, the tax burden experienced by businesses and households in the next five years is definitely on everyones lips. Theresa May has already committed that VAT will remain at 20pc and there are no plans to increase it in the near future.
The Prime Minister later made implications that she was keep to move away from a pledge she made in 2015 Conservative manifesto on not raising income tax, national insurance or vat until 2020 or the end of parliament.
It is becoming clear that the pledge constrained the manageability of economic flexibility. National Insurance, income tax and VAT are around one third of all levies collected by the Government. The 2015 commitment has been described as “foolish” by the Institute for Fiscal Studies.
Tax Burden Highest in Forty Years
We are already seeing an increase in the tax burden for businesses and homes throughout Britain and is due to continue climbing to the highest it has been in forty years by the year 2025.
Growth is expected to be slowed in terms of the tax burdens being a share of GDP, even though there has been new taxes and some existing taxes have been increased in 2015. The Institute for Fiscal Studies has advised that tax receipts the government receives has changed over the past twenty years. In 1999, the tax receipts showed a share of tax revenue in national insurance, VAT and income tax with a growth of 60.7 percent and it is projected to be around 64.1 percent by 2021/2022.
The taxes have also changed in terms off their composition. National insurance and VAT both account for larger shares than recorded fifteen years ago. Corporation tax receipts are expected to drop from ten percent to seven percent.
Income Tax Burden
The highest earners are seeing an increase in their income tax paid. The top one percent of income taxpayers contributed to twenty seven percent of income tax receipts in the last fiscal year. That is an increase of elven percent from the start of the decade. Then those in the top ten percent of income tax payers paid fifty nine percent of income tax.
The Institute for Fiscal Studies believes that the top half of all households pay in the region of seventy eight percent of all national insurance, income tax and VAT.
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