Out there on the right, the Astroturf lobby groups are trying to garner attention by talking about Tax Freedom Day. This has been declared by the Adam Smith Institute, that museum of outdated economic thought that has shamelessly appropriated the name of the founder of economics, to be May 28. Until that point of the year, we are supposedly working for the Government.
More guff from Tufton Street
This is, of course, utter baloney, but it keeps all those well-remunerated minds occupied. And over at the so-called Taxpayers’ Alliance (TPA) there has been a further contribution to the constant attempts to persuade us that we pay too much to the state. Here, a comparison has been made between all the tax that the average family pays, and its spend on food, clothing, housing, fuel and power.
The graphic, on the face of it, looks convincing: all those spending categories totalled up come to less than the amount of tax paid. However, and in this case there is a significantly sized however, a little thought shows that the TPA is, and not for the first time, being singularly disingenuous. Look at the amount of Income Tax and National Insurance, and then consider that this represents around 20% of total income.
Just look at all that VAT - what is it being levied on?
Yes, I know Income Tax is levied at 20%, and National Insurance at another 12%, but there’s a £10,000 personal allowance. A quick and dirty estimate makes the income before tax in this case around £35,000, and probably as well: both columns on the graphic are costs. Together, they give around £17,000. So what’s the problem, if the average family has £18,000 to play with?
But the average family does not: the column of taxes includes items not shown in the household spend column. The average family runs a car, and much of what you pay for that is subject to VAT. Except the TPA haven’t bothered to include this, just the VAT. Likewise any entertainment or holidays – on which, typically, Air Passenger duty is payable. Those outgoings only appear in the tax column.
By this sleight of hand, the TPA makes it look as if all would be well if it were not for all those rotten taxes. Sadly, the deceit is obvious just from one look at the VAT element of the right-hand column: most of what is in the left-hand one is either not subject to VAT, or has a lower rate levied. So something must be missing from the column. The TPA must think that the proles don’t need to travel or be entertained.
The TPA’s objective is to make us join their cause, which they claim is to have us pay less tax, but is in reality to secure lower taxes only for the rich and greedy who bankroll them. Hence their reference to the “2020 Tax Commission”, which would see the state cut back so dramatically there would no longer be an NHS. Average families would be forced to spend their tax cuts on health insurance.
Put together with the dishonest graphic, that’s another slice of TPA dishonesty.