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Heavy Tax Burden Leaves UK Families Poorer Despite Strong Wage Growth

TEWKESBURY, UNITED KINGDOM - JULY 23: A mother and her son look at the empty bakery shelves in a supermarket on July 23 2007 in Tewkesbury, England. Flooding has caused wideswept disruption across the country with further regions braced for more floods. (Photo by Matt Cardy/Getty Images)
Matt Cardy/Getty

High levels of taxation are throttling families, as new statistics show household disposable income falling fractionally, despite pay levels rising.

While recent data showed wages rising at the strongest rate for three years, Office for National Statistics (ONS) figures published Monday revealed the average Briton had £4,813 disposable income in the second quarter of 2018 — 0.1 percent less compared with the same period a year earlier.

This drop was “driven mainly by an increase in current taxes on income and wealth”, according to the body’s latest bulletin on economic well-being in Britain, which also reported that GDP per head grew 0.2 percent from the first to second quarter of this year, making a rise of 0.6 percent compared to the same period in 2017.

Real household disposable income per head is calculated by taking the total amount people have to spend or save after interest payments, national insurance, pension contributions and taxes, with tax rises over the past year equating to an increase of £37.20 per person.

Meanwhile, ONS figures published last month showed average weekly earnings in the three months to July increased by 2.9 percent compared to the second quarter 2017, with almost record low UK unemployment levels as Brexit saw a fall in the number of EU workers.

Commenting on Monday’s bulletin, Aegon pensions boss Kate Smith said the numbers “paint a poor picture of the UK’s economic wellbeing overall”, adding: “Many households may feel that they are just getting by and today’s figure reveal that not only has real household disposable income per head fallen, but many households’ spending is exceeding their gross disposable income.”

Chancellor Philip Hammond’s announcement that he will use his budget this month to raise taxes in order to boost spending on the National Health Service (NHS) attracted criticism from other Tory figures, with Dominic Raab arguing the party should cut down on wasteful government spending rather than raise the burden on UK taxpayers.

Speaking to The Sun last week, the Brexit Secretary said: “I don’t think people are clamouring for big government. I think they want us to make sure that we are carefully managing the economy, which we are doing.”

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