Devious Stealth Taxes Fleece Poorest Pensioners

4.13.53pm BST (GMT +0100) Fri 1st Aug 2003

New figures from the Office of National Statistics show the poorest pensioners in the UK are being fleeced by Gordon Brown's stealth taxes, shelling out 26% of their total income in indirect taxes. By contrast those in the top 1/5th of pensioners by income pay only 13% of their gross income in indirect tax.

The poorest 1/5th non-pensioners are hard hit even harder paying out 30% of their total income with the top 1/5th non-pensioners only 10%.

The new figures obtained by Matthew Taylor MP, Liberal Democrat Shadow Chancellor, show:

• The poorest pensioners are paying proportionally twice as much in indirect taxes than the richest.

• The poorest non-pensioners are paying three times as much in

indirect taxes than the richest.

Previous figures released by the Lib Dems also show how unfair the Council Tax is with the poorest 1/5th of pensioners paying out 6.1% of their income, even after benefits, compared with 1.6% for the top 1/5th.

Mr. Taylor, said: "All these stealth taxes may help Brown avoid income tax rises, but they hit ordinary people hardest. Labour's tax system is unfair, devious, and has got to be reformed. Its time we have a fair tax system, where people can see how much tax they are paying and related directly to how much they can afford."

"We know the unfair Council Tax slams the poor hardest and yet successive Tory and Labour Govs keep forcing it up. It is time to scrap the Council Tax, which Gordon Brown plans to hike by 10% over the next two years."

ENDS (see Notes to Editors)

STEALTH TAXES HIT POOREST HARDEST

HC Deb 15 July 2003 : Column 216W

Source: Letter from Len Cook to Mr. Matthew Taylor, dated 15 July 2003:

Indirect taxes as a percentage of gross income for retired and non-retired households, 2001-02 United Kingdom Household type.

Boundary point between equivalised disposable income quintiles (£ per year)

Indirect taxes (as percentage of gross income)

Retired Bottom - 26.2

9,026

2nd 19.1

11,354

3rd 18.1

13,878

4th 17.3

18,465

Top 13.0

Average for all retired households 16.7

Non-retired Bottom 30.4

11,604

2nd 19.5

17,038

3rd 17.1

22,711

4th 14.1

31,321

Top 9.9

Average for all non-retired households 14.6

Source:

Office for National Statistics, based on the analysis 'The effects of taxes and benefits on household income', published on the ONS website and in Economic Trends No. 594 May 2003.

COUNCIL TAX HITS POOREST HARDEST

HC Deb 30 Jun 2003 : Column 49W

Source: Letter from Len Cook to Mr. Edward Davey, dated 30 June 2003:

Council tax as a percentage of gross income for pensioner1 and non-pensioner households, 2001-02, England Percentage Quintile

groups of all households ranked by equivalised disposable income

Households Bottom 2nd 3rd 4th

Top All households

Quintile points(8) (equivalised Pensioner 9,230

11,539 13,998 8,548

disposable income £ per year) Non-pensioner 11,773

17,264 23,332 32,276

Gross council tax Pensioner 8.3 4.9 2.9

2.3 1.6 2.8

Non-pensioner 7.4 4.5 3.6 2.8

1.8 3.1

Net council tax(9) Pensioner 6.1 3.4 2.1

1.9 1.6 2.2

Non-pensioner 4.6 3.9 3.5 2.7

1.8 2.8

(9) Net council taxes after deducting benefits and discounts.

Source: Office for National Statistics, based on the analysis 'The effects of taxes and benefits on household income' published on the ONS website and in Economic Trends No. 594 May 2003.