British public wrongly believe rich pay most in tax, new research shows

Study shows poorest 10% pay eight percentage points more income, prompting calls for more progressive system

The British public dramatically underestimate what the poorest pay in tax and wrongly believe the richest face the biggest tax burden, according to new research that calls for a more progressive system. The poorest 10% of households pay eight percentage points more of their income in all taxes than the richest – 43% compared to 35%, according to a report from the Equality Trust.


The thinktank highlights what it sees as a gulf between perceptions of the tax system and reality. Its poll, conducted with Ipsos Mori found that nearly seven in ten people believe that households in the highest 10% income group pay more of their income in tax than those in the lowest 10%.


The survey of more than 1,000 people also found a strong majority – 96% – believe that the tax system should be more progressive than is currently the case. Duncan Exley, director of the Equality Trust, said the findings underlined the need for the next government to overhaul the system.


"The public are misled about this country's tax system. They think households with the highest incomes pay more than those with the lowest, whereas the opposite is the case. Even more concerning is how little our current system matches people's preferences on tax. There is clearly strong support for a system that places far less burden on low-income households," he said ahead of the "Unfair and Unclear" report.


"We're calling on all parties seeking to form the government from 2015 to commit to the principle that any changes in tax policy are progressive."


Not a single respondent in the poll knew how much the richest and poorest paid in tax. On average the public underestimates what the poorest 10% pays in tax by 19 percentage points, believing they pay just 24% of their income in taxes, the Equality Trust said.


When asked about how to make the tax system fairer, on average, people said the poorest 10% should be taxed just 15% of their income, or 28% percentage points less than they currently are. They believe the richest 10% should be taxed 39%, or 4 percentage points more than now.


The report said the higher percentage paid by the poor at the moment was down to a number of taxes. "While income tax and national insurance are broadly progressive, the bottom 10% of households pay roughly 23% of their gross household income in indirect taxes on consumption and more than four times as much of their income in council tax as the top 10%," it said.


It urged the next government to radically reform council tax by re-evaluating properties and creating new bands with higher rates for high value properties. It also called for ministers to cut VAT when it has a budget surplus.


The recommendations follow calls from the European Commission earlier this month for the UK government to reform the "regressive" council tax system, as taxes are relatively higher on low-value homes than high-value ones.

- Source: theguardian.com