The chart below shows a breakdown of where my monthly gross income goes. I’m earning in the region of £30k/year, above the London average but not exactly an enormous sum.
One of my favourite adages is that British people want Scandinavian public services with American tax levels. Raising taxes to tackle the deficit is treated as something approaching political suicide. But do we pay all that much in tax?
Put aside the fact that at 36% of the UK’s GDP, the current tax level is lower than under Margaret Thatcher (when it dipped to 40%) and much lower than the Swedish level of around 50%.
How does tax affect me? Well my income tax and council tax, which pay for all the basic public services, the roads, waste collection, public transport investment, welfare for people in harder circumstances and much more account for less than my rent, which pays for my half of a flat with my fiancee. My national insurance and pension contributions that are hopefully securing my retirement add up to much less than my rent as well. Since I don’t spend a great deal on clothes, cars, TVs and the like, I’m not too affected by indirect taxes like VAT either.
After all those taxes and basic life expenses, I still have 35% of my gross income left over for fun, holidays, personal savings and the like.
If I were to get pissed off about someone taking all my money, my first target would be the property market. Look how much money I have to spend just to afford a reasonable flat in an area I like! Then there’s my inability to afford to buy a home making my future less secure, low interest rates on my ISA bond and in the short term the likely rises in bus and train fares due to spending cuts.
Yep, all things considered I think tax is the least of my financial worries.
Anyone on similar or higher incomes who crows about tax levels should stop for a moment and think about the majority who earn less and stand to lose a great deal from public spending cuts.