D Tel: Millions more pay 50% tax


K

kuacou241

Millions more pay 50pc tax
By David Derbyshire, Consumer Affairs Editor

Daily Telegraph
(Filed: 05/11/2005)

Millions of families have been dragged into the net of high-rate taxes
as the Government depends increasingly on "stealth taxes", according to
figures released today.

Typical middle- to high-income earners now pay up to 50 per cent of
their salary to the Treasury, compared to 36 per cent when Tony Blair
came to power in 1997.

Graphic 1: http://tinyurl.com/dhzn2

Even families on modest incomes are paying significantly more tax under
Labour, says an analysis from a leading accountancy firm.

Although the Government has kept the headline rate of income tax
untouched, it has generated tens of billions of pounds by manipulating
tax allowances and subtly tweaking tax rates.

Since 1997, about 1.6 million people have become higher-rate taxpayers
because Gordon Brown, the Chancellor, failed to keep thresholds in line
with rising salaries.

The Treasury has also taken advantage of rising house prices,
particularly in the South.

The Daily Telegraph disclosed this week how home buyers paid a record
£5.5 billion in stamp duty last year - an eightfold increase on 1997.

House prices are also dragging thousands of people into the inheritance
tax net. The amount collected in death duties has almost doubled since
Labour came to power.

According to a new report out today, the number of people paying death
duties could rise by a third again within four years.

Much of the extra tax revenue has come from low- to middle-income
families rather than the super-rich.

Graphic 2: http://tinyurl.com/aeekf

The Conservatives called for an end to "creeping stealth taxes"
yesterday and urged Mr Brown to introduce transparency into the tax
system.

George Osborne, the shadow chancellor, said: "Gordon Brown has
increasingly targeted his stealth taxes to hit the homes of hard
working families. By failing to increase the thresholds on stamp duty
and inheritance tax in line with the increases in house prices, he is
penalising hundreds of thousands of families who happen to live in
parts of the country where property is expensive.

"I believe the tax system should support rather than penalise families
building their financial security and independence."

Statistics published this week by the Government showed how public
finances have become increasingly reliant on stealth taxes and a
phenomenon called "fiscal drag" - where tax allowances and thresholds
are not increased in line with wages or house prices.

The effect is to draw taxpayers into new and higher tax bands.

Over the past eight years, for instance, the revenue from income tax
has gone up 78 per cent - from £69 billion to £123 billion. Most of
this rise can be attributed to fiscal drag.

Stamp duty on house sales has also become an important source of
revenue. It rose from £675 million in the last year of John Major's
government to £5.5 billion last year.

Inheritance tax revenue has risen from £1.6 billion to £2.9 billion,
while income from capital gains tax has more than doubled from £1.1
billion to £2.3 billion in eight years.

Because house prices are so much lower in the North, many see
inheritance tax and stamp duty as a levy on southerners.

John Whiting, an expert in inheritance tax at Price Waterhouse Coopers,
said: "It's the fiscal drag effect. Income tax, for instance, goes up
in line with inflation but wages are going up faster, dragging more
people over the higher tax threshold." Inheritance tax has been
particularly lucrative for Labour because of the steep rise in property
prices. This year around 37,000 people will pay inheritance tax. In
1996-97, 15,000 people paid.

"I think there's an element of deliberate neglect here. With
inheritance tax and stamp duty you have taxes that are automatically
bringing in more money year on year because they are beautifully geared
to rising house prices."


http://news.telegraph.co.uk/news/main.jhtml?xml=/news/2005/11/04/wcia04.xml
 
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J

JM

Millions more pay 50pc tax
By David Derbyshire, Consumer Affairs Editor

Daily Telegraph
(Filed: 05/11/2005)

Millions of families have been dragged into the net of high-rate taxes
as the Government depends increasingly on "stealth taxes", according to
figures released today.

Typical middle- to high-income earners now pay up to 50 per cent of
their salary to the Treasury, compared to 36 per cent when Tony Blair
came to power in 1997.
....but only if you figure on them buying a house every year and paying
the appropriate stamp duty.

The figures aren't so alarming if you exclude the stamp duty.

John.
 

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