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Tax burden falling on less well off, say researchers

UK taxation since the 2008 crash has been increasingly hitting the less well off, according to a team of Sheffield experts.

And the trend has accelerated since the Coalition government came to power in 2010, say academics at the Sheffield Political Economy Research Institute.

The latest evidence on tax revenue shows that progressive taxes - which take more from the better off than the poor - such as income tax and capital gains tax, contribute 54 per cent of total receipts, down from 58 per cent five years earlier.

In contrast, regressive taxes such as VAT - which hit everyone equally - contribute 28 per cent of total tax receipts, an increase from 25 per cent.

The Sheffield research found that, of all the major forms of taxation, VAT has taken on an increasingly prominent role due to a rise in the rate to 20 per cent, introduced by the Coalition.

VAT revenue has risen from £81 billion, accounting for 16 per cent of tax revenue, to £101 billion, 18 per cent of tax revenue.

The Coalition has also explicitly sought to reduce business taxes such as corporation tax. As a result business taxation now contributes 12 per cent of total tax receipts, down from 14 per cent in 2009.

 

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