Ask not what people on low incomes are doing for their country

By Bernadette Meaden
August 13, 2019

It was recently revealed that 43 per cent of UK adults pay no income tax, because their annual income is below £12,500. This is shocking. To have such a large proportion of the population living on such low incomes is a terrible indictment of the way our economy works, and strengthens the case for radical change. Whichever way you look at it, surely what this figure shows is that large numbers of people need an urgent boost to their incomes.

In some quarters however, a different view was taken. Newspapers like the Daily Mail and Telegraph presented it as “23 million leave 31m to foot bill for running the country”, and “43 per cent now live tax free”. There was also much sympathy for the wealthy, the top one per cent who now pay 27 per cent of all income tax, and are, it was suggested, unfairly burdened.

This is of course nonsense. Income tax is just one tax, accounting for only around a quarter of the government’s tax revenue. Others, like Council Tax and VAT are paid by everybody, and they hit those on low incomes much harder than their wealthier neighbours. Indeed the Equality Trust argues that, “Britain's poorest households pay a greater proportion of their income in taxes than the richest.” 

Yet sections of the press more or less implied that people who may be doing difficult jobs, perhaps on zero-hours contracts for meagre wages are freeloaders living ‘tax free’. They conveniently ignored the bit of the IFS report that said the incomes of business owners are taxed at lower rates than employees, “which therefore benefits a significant share of the top one per cent.”

 Of course, we know those newspapers have an agenda – but I was shocked to see a tweet from BBC Radio 5 Live which, promoting a discussion programme which seemed to be taking its cue from the Daily Mail said: “New research shows 43 per cent of UK adults don't pay income tax. Do those who pay it deserve more say in how tax-funded public services are run? That's what @EmmaBarnett is asking.”

It’s difficult to express just how regressive this question really is. Is universal suffrage being called into question? How would income tax payers get ‘more of a say’? Present your tax code at the polling booth? Are almost half of our fellow citizens to be deemed in some way less valid, simply because of the way our tax system is organised? And just to add to the injustice, the reason so many people no longer pay income tax is due to a deliberate and canny political strategy.

Through all the years of austerity, one policy was consistently presented by the Conservatives as evidence of their concern for low paid workers. The government kept raising the personal tax threshold, so taking people at the bottom end of the scale out of paying income tax. As is so often the case, however, the real effect was quite different from the spin. The policy actually benefits the wealthy far more than the poor, saving those on higher rate taxes more money than those on the basic rate.  But a policy which was useful in making Conservative governments look as if they were caring for the low paid is now being used by some to suggest these same low paid people do not have ‘a stake in society’.  

This is not only morally objectionable and unjust, it’s economically wrong-headed. The same media which questions the civic value of low-paid citizens will ask, in almost the next breath, why retail sales are down. The answer could not be more plainly staring them in the face – too many people have too little money to spend. And again, this is due to a deliberate political strategy.

Austerity, with its benefit cuts, spending cuts and public sector wage freeze, has brought us to the point where wages are still lower in real terms than they were a decade ago, reducing demand in the economy. There is a just and socially beneficial remedy, but it may not appeal to government ministers like Liz Truss, Dominic Raab and Priti Patel, who are famously on record as believing British workers to be “among the worst idlers in the world.”  

As a report from the New Economics Foundation this week says, “Raising demand by putting more cash in the pockets of the UK’s poorest workers, while giving people more paid time off from work to spend it, should now be part of a radical mix of options for any government that is serious about increasing productivity in a way that works for people and society.” This would not only boost the economy, but would be fairer, make life better for people, and could in the long term improve people’s health and reduce demand on the NHS.

If we really want to strengthen the economy and improve physical and mental wellbeing, we should not be asking what people on low incomes are doing for their country, but what their country is doing for them.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden 

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.