George Osborne holds freshly minted coins during a visit to the Royal Mint in Llantrisant, Wales on March 25, 2014. Photograph: Getty Images.
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The public want a more progressive tax system - and they're right

Ninety six per cent of people support a fairer system, with the richest paying more than double the poorest.

Tax is a regular area of public and political debate in the UK. Who pays what, who avoids tax, and whether tax is "fair" are questions that are regularly tackled in our press and in Parliament. But much of this debate is shrouded in misinformation, half-truths and downright lies. When people make bold commitments to lift the "low-paid out of tax" for example, or "ensure those on the national minimum wage pay no tax" they rarely mean it. What they actually mean, more often than not, is to lift people out of paying income tax. This may sound like semantics, but there is a rather important difference.

Alongside commitments to lift the poor out of paying tax, we also occasionally hear wild claims made about how "the richest 1 per cent pay 30 per cent of all taxes". A good headline no doubt, but unfortunately, complete nonsense. Again, the richest 1 per cent pays about 30 per cent of all income tax. That is, they pay 30 per cent of a tax that accounts for only 27 per cent of all taxes. The problem with such comments isn't just that they are plainly wrong, it is that they distort the debate and skew public perceptions of our tax system towards sympathy for a supposedly overburdened, hard-working "elite", punished for their success by high taxes. At the other end, we're led to believe that the poorest pay little enough tax so that it is a simple move to lift them out of tax altogether. 

New research from the Equality Trust shows just how misleading these sorts of statements are, and just how far they take us from the truth of what the richest and poorest are taxed. Analysis of ONS data shows that  when all taxes are taken into account, the poorest 10 per cent of households actually pay 23 per cent more of their income in taxes than the richest 10 per cent of households. In fact, they pay a huge 43 per cent, whereas the richest pay just 35 per cent:  the same as the average household. 

But public understanding of how much others in society are taxed is now wafer thin. Polling conducted by Ipsos MORI in partnership with the Equality Trust found that nearly seven in ten (68 per cent) people actually believe the richest 10 per cent of households pay more of their income in tax than the poorest 10 per cent. Particularly shocking is the fact that on average the public under-estimates what the poorest 10 per cent pay in tax by 19 percentage points, believing they pay just 24 per cent of their income in taxes.

This lack of understanding is more shocking when we see just how little support there is for our regressive tax system. Further polling found that 96 per cent of people believe that the tax system should be more progressive than is currently the case. On average, people believe the poorest 10 per cent of households should be taxed just 15 per cent of their income, 28 percentage points less than they currently are. They believe the richest 10 per cent should be taxed 39 per cent, or 4 percentage points more that they are. On average they believe the richest should be pay more more than double the total tax rate of the poorest.

Even more interesting is the fact that although there are some small fluctuations, there is majority support for a more progressive tax system across political party lines, gender, age and even income groups. 

It is true that the poorest 10 per cent of households contains those that are unemployed, as well as students and other people who receive various welfare payments. But while we often hear about how much the "lazy" and "indolent" undeserving poor receive in government payments, we rarely hear about how much of that money is then clawed back. 

Our report "Unfair and Unclear" shows just how far our current tax system is from the public's preferences on how much people should be taxed. Moreover, when looking at the richest and poorest 10 per cent of households, the system is in fact hopelessly regressive. So what can we do about it? There are number of sensible approaches that have so far been resisted by most policy makers and politicians. The first it to tackle our absurdly regressive council tax by transforming it into a progressive property tax, by re-evaluating properties and creating new bands with higher rates for higher value properties. The second is to raise the upper limit of National Insurance Contributions to ensure that the tax is progressive across all deciles. We would also expect to see Government aim to reduce VAT when it has a budget surplus, at the very least. More importantly, we are calling on all parties seeking to form the government from 2015 to commit to the principle that any changes in tax policy are progressive.

Tax plays a hugely important role in people’s lives. It can determine the affordability of basic necessities like food and household bills, but it can also determine the quality of local services, healthcare and education. It is important that people are aware of who pays tax and how much, but equally we must build a tax system that better acknowledges the values of the vast majority of the electorate.  The gap between public perceptions, preferences and reality when it comes to our tax system should be of deep concern to politicians of all hues. Building a system that is fit for a fair society must now be a priority.

Duncan Exley is the director of the Equality Trust

Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.