The answer might seem obvious, that the more the rich pay the less the poor have to pay.
Let’s get one myth out of the way. The one which says that taxing the rich ever higher amounts leads to greater and greater tax being collected. When you keep increasing tax on the ‘rich’ your total tax take falls, because the seriously rich will live in another country or find another solution to escape the robbery.
The theory behind this surprising set of effects [i.e. lower tax receipts from taxing the rich too much] is now associated with the name of US economist Arthur Laffer. The ‘Laffer Curve’ suggests that when governments initially start to raise tax revenues, they pull in greater and greater receipts. But as rates continue to climb, receipts start to level off until, eventually, further tax rises produce falling receipts. This is because there comes a time when, facing large tax bills, people simply stop bothering to work, or move into the black economy, or go abroad, or lie about their income, or employ expensive accountants to help them avoid the tax.
What the poor and their supposed representatives in, for example, the Labour Party call for is punitive taxes on those they perceive to be rich, which would have the effect of increasing the tax burden on the poor.
Consider how much tax the poor actually pay. Those on very low wages and benefits won’t have to pay income tax, but depending on what they buy, they could be paying a very high tax rate.
In the days long ago when I was a very heavy drinker on benefits, I paid an enormous tax rate, as do drinkers today.
Both Westminster and Edinburgh governments want to impose a minimum price per unit for alcohol, citing ‘health’ as the concern. NHS Scotland states in its defence:
Research shows that people on a low income or who are living in deprived areas are more likely to suffer from a long term illness as a result of drinking too much . People who live in the most deprived areas of Scotland are six times more likely to die an alcohol-related death than those in the least deprived areas.
The poor drink more. Or if you weren’t poor to begin with, you will be eventually if you cannot stop drinking.
But to reiterate, the poor are encouraged to complain about the tax rates of the rich while conveniently being unaware of their own tax burden.
Just picking some of my old favourites and working out the total tax, these are the results (retail prices correct at time of writing):
Kronenbourg 1664: 20 x 275ml bottles – cheapest price £12.
Working out the total tax:
Alcohol duty is £18.74 per hectolitre (100 litres) for each percent of alcohol in the beer and Kronenbourg is 5% ABV:
£18.74 x 5 = £93.70 per 100 litres
20 x 275ml = 5.5 litres
So duty is 5.5% of £93.70 which is £5.15
There’s also the 20% VAT to take into account. You just divide the total by 6 to get £2.00
So the total tax on this lager is £7.15, or 59.6% of the retail price.
I was a whisky lover too. The total tax on a 70cl bottle of Whyte & Mackay is £9.90 and by coincidence is also as low as £12. That’s a tax rate of 82.5%!
When times were really hard, I ended up on the strong white cider. I cannot find a price for the brands I used to drink, like “White Lightning”, but another choice of the serious drinker, though I rarely touched it, is the super-strength lagers. Perhaps the best known is Tennent’s Super. The tax on the price of £7.50 for 4 x 440ml cans works out at 57.5%.
It is interesting that there is a large warning on these cans. People who buy this product aren’t, generally, ‘responsible’ drinkers. It appeals because it’s very strong lager and they have a disease called alcoholism. Can we expect alcohol packaging to go the same way as tobacco and have graphic pictures of diseased livers, hopeless drunks, young women throwing up, teenagers on life support and images of violence, such as a ‘glassed’ face stitched up?
The poor are most likely to drink to excess and consequently pay huge amounts of tax, but aren’t encouraged to complain. For a few years, I probably spent almost my entire benefit money on booze. Other expenses were supplemented by borrowing a few thousand from my parents while also making savings, such as practically freezing some winters. Of course, minimum pricing will plunge problem drinkers into even deeper poverty.
The poor are also more likely to smoke. According to Audit Scotland’s “Health Inequalities in Scotland” (pdf) report from December 2012,
Prevalence is around four times higher in the most deprived areas than in the least deprived areas. Around one in ten people in the least deprived areas smokes, compared with four in ten people in the most deprived areas.
Without tax, cigarettes would cost around £2.00 for 20.
Then there’s the price of petrol and diesel,
British drivers pay a higher rate of tax on fuel than any other motorists in the European Union, according to a new study.
For every litre of unleaded petrol bought in the UK, 61 per cent of the pump price goes to the government as fuel duty and VAT along with 59 per cent of every litre of diesel.
Yet again, this disproportionately affects the poor. Even people without cars who rely on buses and taxis pay more because of this. Groceries cost more due to the high cost of deliveries.
The small town I live in has lost so many jobs that more and more people seem to commute to the region’s ‘capital’, Dumfries, every day, which is 70 miles away.
But if you hadn’t already worked it out, don’t expect the MPG you actually get with the manufacturer’s figure.
Fed up with relentlessly rising fuel prices, you’ve traded in that large, thirsty car for something smaller and more economical. However, the 60mpg suggested by the sticker in the showroom is turning out to be closer to 45mpg in the real world. Welcome to the Disgruntled Club – a growing body of people angered by what they see as misrepresentation of cars’ fuel economy.
The blame for inaccurate fuel figures largely rests with the European Union test that produces them.
Official fuel figures are obtained from a series of tests known as the New European Driving Cycle (NEDC). This is supposed to represent typical usage, though in reality it does nothing of the sort (see below for details of the NEDC test). It is conducted under laboratory conditions, and power-sapping electrical features which would increase fuel consumption remain switched off.
While the EU slams us with ‘green’ legislation and taxes, they mess up on such a simple environmental issue. Useless, aren’t they?
At £1.30 a litre for petrol (£5.91 per gallon), those 700 miles a week to and from work at, say, 50 MPG cost £82.74 of which £50.47 is tax. People are paying fifty pounds extra tax on already-taxed income just to get to work and back home.
Then there’s council tax, which isn’t related to income and the 20% VAT on almost everything you buy except for food, but you pay it on takeaways, so loved by the poor.
So the poor are being hammered left, right and centre with tax, but as if under hypnosis are oblivious to it, just as they probably don’t appreciate just how much of everybody’s taxes are frittered away unnecessarily.
They’re concentrating on the hypnotist’s watch….despise the rich….they’re the source of your poverty….carry on paying massive amounts of tax on your meagre income without noticing…