The cost of living crisis won’t go away until the burden of taxation is eased
While Westminster focuses on the fallout from Sue Gray’s report, a cost-of-living crisis is brewing. Ever rising taxes and bills are putting an unprecedented strain on families across the country.
As the TaxPayer’s Alliance revealed last autumn, the tax burden now stands at a seventy year high. The pandemic of course necessitated increased expenditure, but the covid crisis is coming to an end. Yet, the tax burden is continuing to rise.
Years of high-spending, tax-raising governments are taking their toll. Our new report shines a light on exactly what this means for families up and down the country. The average household will now pay a whopping £1.1 million in tax during their lifetime.
At a time when the calls to spend more money are unrelenting, politicians are too quick to forget the people who have to pay for it
What does that £1.1 million mean in concrete terms? For families hit with that bill, it would fund a detached house in England; a new Audi A4; two weeks every year in a full board, a holiday at 4-star hotel in the Costa Del Sol during the summer; a National Trust lifetime membership for two; tuition and maintenance fees for two children to go to university; a season ticket every year to a Premier League club; and a pension pot granting a guaranteed annuity of £10,800.
Each of these purchases could make a huge difference to working people's lives. Yet a wall of taxation stands in their way. At a time when the calls to spend more money are unrelenting, politicians are too quick to forget the people who have to pay for it.
Unlike some of their representatives in the House of Commons, the average household can’t claim expenses for a home near their workplace. They aren’t treated to front row seats at football matches. They don’t get free foreign travel as part of their job. Their pension plan isn’t as generous as Parliament’s. They often wonder if politicians really understand their plight, as they face an endless battle with the taxman over their hard-earned cash – a battle which at present they are losing.
Our analysis further breaks down the lifetime tax bill for households in each quintile, including those that are struggling the most. The figures are eye-watering wherever you are on the income scale, but in terms of years working for the taxman, it is the poorest 20 per cent of households who are hit the hardest. Those in the bottom quintile face a lifetime tax bill of £450,000. This would take 24 years of work to pay off, longer than any other group. It means that an 18-year-old entering the world of work would be in their 40s before they really start working for themselves and their families.
There’s little sign of things getting better. Since 1977, only four years have seen the lifetime tax bill fall, and this year is unlikely to be added to the list. The figures don’t even account for April’s planned National Insurance tax hike. Nor does it include council tax rises, or the freeze in the tax thresholds.
So, regardless of how events unfold over the coming months, the cost of living crisis won’t go away until the burden of taxation is eased. Politicians should begin by at least not making things worse.
Elliot Keck is Investigations Campaigns Manager at the TaxPayers' Alliance.
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