S THERESA MAY genuinely ignorant or did she try to mislead the Prime Minister’s Questions TV audience by exaggerating the tax share of the richest 1 per cent in Britain?
Labour leader Jeremy Corbyn developed his query over why nearly 1,000 private business jets had been imported into the Isle of Man by asking if she thinks it acceptable that, “when it comes to paying taxes, there’s one rule for the super-rich and another for the rest of us.”
May responded by declaring: “The top 1 per cent of earners in this country are paying 28 per cent of the tax burden.”
Wrong. Highest-earners — those with gross incomes over about £164,000 — contributed 27 per cent of income tax receipts last year, but income tax is not the only taxation source for the Exchequer.
Indeed, according to the Institute for Fiscal Studies, income tax accounted last year for just 25 per cent of the tax take, closely followed by 19 per cent for National Insurance contributions and 18 per cent for value added tax (VAT).
NI is paid by all employees earning annually between £8,164 and £45,000 at a flat rate of 12 per cent, while those paid over £45,000 are levied just 2 per cent.
VAT, in common with most other indirect taxes that cumulatively provide 8 per cent of the Chancellor’s annual take, weighs most heavily on lower-paid workers, being based on consumption rather than ability to pay.
The Tories and their Liberal Democrats boasted during their coalition government of how many low-earners were saved from paying income tax by successive increases in the personal allowance, but this means only that the percentage of the adult population paying income tax has fallen from 61 per cent to 57 per cent.
It scarcely needs repeating that the reason that 43 per cent of adults pay no income tax is because their incomes are so small.
More notable is the reduction in corporation tax levied on big business as the Tories are engaged in a long-term programme to slash the tax contribution required from this area.
Standing at 28 per cent in 2010-11, it is currently 19 per cent and set to be slashed further to 17 per cent in 2020–21.
Corbyn has warned that the Tories plan to turn Britain into little more than an offshore tax haven if they get their way over how leaving the European Union plays out.
His revelation about the 957 business jets imported through the Isle of Man, together with his reminder of Labour’s intervention, via HM Revenue and Customs, to close an earlier tax-dodging scheme to import yachts via the island, gives added weight to his warning.
It confirms too that, while most taxpayers have no choice over paying tax, having contributions deducted at source by PAYE, big business and the rich elite are constantly seeking ways to avoid paying their rightful share.
Such activity is often justified or excused by its practitioners and well-heeled media commentators on the grounds of natural self-interest.
But tax avoidance — frequently assisted by government complicity in providing loopholes to be exploited by wily accountants — results in inadequate resources to finance areas referred to by Corbyn at PMQs, namely health, education and social care.
Labour should continue to underline its message that taxation is necessary to provide a civilised society and that those best placed to contribute most should do so.
This article appeared in The Morning Star, 2nd November 2017