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Poor households 'pay 47% of income in tax'

Credit: Nick Ansell/PA Wire

The poorest 10% of households pay almost half of their gross income in tax, analysis by a campaign group has claimed.

The TaxPayers' Alliance research found that direct and indirect taxes accounted for an average 47% of the gross income of the poorest 10% of households, with VAT accounting for the biggest share of the bill.

The analysis of Office for National Statistics figures showed that the average gross income, including benefits, in the group was £9,743 but after tax the figure was £5,132.

The figures for 2012/13 showed that for the poorest 10%, some 13.9% of their gross income went on VAT, 7.2% on council tax and 5.6% on alcohol or tobacco duties.

The top 10% of households paid an average 35% of their gross income in taxes, some £37,287 a year, with income tax accounting for 19.1% of the money paid to the Exchequer.


Clegg pushes Osborne for £1bn income tax giveaway

Liberal Democrat leader Nick Clegg wants Chancellor George Osborne to raise the income tax threshold. Credit: Dominic Lipinski/PA Archive

The Liberal Democrats want the coalition to raise the income tax threshold above £10,500 by 2015, which could effectively mean a £100-a-year tax cut to 24 million basic rate payers.

The move, which would take half a million people out of income tax altogether, would represent a £1 billion tax giveaway before the next general election.

The Lib Dems have already seen the coalition achieve their manifesto commitment to raise the personal allowance to £10,000 - which was finally reached in the last Budget in March.

Lib Dem leader Nick Clegg will write to party activists next week calling for a "workers' bonus" to reward voters for the financial sacrifices they have made during the years of austerity.

Danny Alexander: Tax reforms will make work pay

Chief Secretary to the Treasury Danny Alexander has said that income tax changes that came into effect today will help make work pay.

Chief Secretary to the Treasury Danny Alexander. Credit: Gareth Fuller/PA Wire

Mr Alexander told Radio 4's Today programme that the coalition government "is working hard to help those on low and middle incomes".

He added: "We think it's important that we make work pay, that we reward people who are working hard on ordinary incomes and that is what the increase in the personal allowance will do".

TUC: Tax reforms 'huge slap in the face' for families

The Government's sweeping changes over tax rates is a "huge slap in the face" for families, the TUC general secretary said today. The new tax reforms include a cut in the top rate of income tax from 50p to 45p.

TUC general secretary Frances O'Grady said:

Cutting taxes for the richest in our society is a huge slap in the face for the millions of hard-working families struggling to make ends meet.

This move, which will lead to the loss of vital revenues, comes at a time when low-income households are seeing a huge range of vital benefits and tax credits mercilessly cut back.

It says a lot about this government's priorities that it is forever coming up with new ways to take money away from those at the bottom, whilst handing out tax breaks to those at the top.

Government changes to tax reform come into effect

Labour has attacked the Government over sweeping changes to tax rates that came into effect today.

The Prime Minister said that from today 24 million people will be paying £600 less income tax than in 2010, while the opposition launched a poster with the tagline "Who Wants to Bung a Millionaire? Dave Does".


Clegg attacks Labour over tax rate claims

Deputy Prime Minister Nick Clegg has attacked Labour for trying to "pull the wool over people's eyes" over tax reforms that came into effect today.

Deputy Prime Minister Nick Clegg attacks Labour over sweeping tax change claims. Credit: Matt Dunham/PA Wire

Labour launched its own poster - with the tag "Who Wants to Bung a Millionaire? Dave Does" - setting out claims that high earners are benefiting while millions are worse off under coalition reforms.

But Mr Clegg insisted ministers had fixed a "gross unfairness" in the system left by the previous government that allowed the rich to pay less tax than the poor. In a "letter from the leader" he told Lib Dem supporters:

"Of course, the new 45p upper tax rate - down from 50p - is also coming into effect. But don't let Labour pull the wool over people's eyes. They may complain now, but of the 13 years they were in power, the 50p rate was in place for just 36 days."

Tax change spin war fought on Twitter

Prime Minister David Cameron took to Twitter to highlight the increase in the personal tax allowance. He wrote:

Mr Cameron also included a link to a new Conservative poster outlining the change with the headline "Help for Hardworking People".

Labour launched its own poster - with the tag "Who Wants to Bung a Millionaire? Dave Does" - setting out claims that high earners are benefiting while millions are worse off under coalition reforms.

Unite: 'Taxpayers will be furious with George Osborne'

Millionaires will be raising a glass of champagne to George Osborne this weekend as he slashes the incomes of people struggling to get by to give handouts to the rich.But ordinary people - taxpayers - will be furious that George Osborne has chosen to give away £1 billion to the super-rich while their fuel and food costs rise and wages are falling.

His party knows no shame. They are trying to claim that their tax cuts benefit ordinary people but this is another lie - the truth is that while those earning over £1 million per year will be an average £100,000 better off, low income families will be around £900 worse off.

This is not the way to recover our failing economy. Creating real jobs and paying decent wages, including a one pound increase on the minimum wage, will bring down the benefits bill and get people spending again.

Instead of getting on with the job he ought to be doing, like sorting out the problems he has caused to our economy, Osborne prefers to encourage hatred and demonise the poor, both in and out of work, in an ideological attack on our welfare state.

– Len McCluskey, Unite general secretary
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