Average UK Family’s Lifetime Tax Spend Nears £750,000

The average British household will pay nearly a quarter of a million pounds in tax, working for nearly 19 years just to pay the tax bill, new research has found. Despite rhetoric from the Chancellor George Osborne on cutting taxes, the figure represents an increase in overall tax for all but the wealthiest 20 percent.

The Taxpayers’ Alliance has totted up the total tax paid throughout a person’s life, both in working and retirement years, and found that the average household would be liable for a grand total of £734,240 (in 2013-14 prices) in direct and indirect taxes. That figure represents a 2.3 percent increase on the calculation from the previous year.

At the bottom end of the scale, the poorest 20 percent would be in line to pay £282,545 in direct and indirect taxes, a 4.1 percent increase on the previous year’s calculation. But with an average salary in that bracket of just £12,916, it would take nearly 22 years for a household to pay the bill.

Meanwhile, at the other end of the scale, the top 20 percent actually saw a 2.2 percent decrease in their lifetime liabilities, although that still leaves them on the hook for a whopping £1,488,275.

In his most recent budget speech, the Chancellor George Osborne told the nation: “This will be a Budget for working people.”

Four times during the speech he insisted: “We have to move Britain from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, lower-welfare economy.”

Commenting on the findings, Harry Fairhead, Policy Analyst for the TaxPayers’ Alliance said: “For several years, the high cost of living in the UK has been recognised by the political classes as an area which requires an urgent and concerted policy response. However all too often, these policy responses focus on demand and fail to address underlying issues.

“All too often, government is responsible for many of the problems. Energy bills are increased by ineffective “green taxes” and the cost of housing is driven up by draconian, outdated planning regulations for example.

“Tax is perhaps the biggest culprit of all. Instead of forever seeking to solve the problem of the high cost of living with various subsidies such as Help to Buy ISAs, tax credits, Housing Benefit etc. politicians need to recognise that the reason many people struggle to make ends meet in the first place is due to the high tax burden.”

It was these costs that UKIP’s leader Nigel Farage collectively referred to as the “cost of government crisis” ahead of last May’s general election. Setting out the Ukip stall in the Telegraph, Mr Farage promised: “Ukip will put at the heart of its campaign not just the cost of living crisis, because we know that Britons are feeling the pinch, but also the cost of government crisis,” as he called on the British electorate to “Believe in Britain.”

The four most burdensome taxes over a lifetime are income tax, which cost on average £253,040 over a lifetime, followed by £146,775 on VAT, £92,795 on employees national insurance contributions, and £59,955 on council tax.

This order is not consistent across all brackets; for the bottom 40 percent, VAT presented the greatest burden (costing the bottom 20 percent £80,755 over their lifetimes), followed by council tax, then income tax, and finally NI.

Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said: “This new analysis shows just how heavy the burden of taxation falls on each and every family across Britain, pushing up the cost of living.

“Every arm of local and central government must redouble its efforts to root out unnecessary spending and inefficiency in everything they do, so that not a penny of this extraordinary bill is wasted. Britain’s tax bill is too high – it must come down, and that means cutting out wasteful spending.”

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