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November 05, 2005

Rising Taxes.

The Telegraph reports on how taxes have risen in the last 8 years. All those complaints about stealth taxes seem to be true:

Over the past eight years, for instance, the revenue from income tax has gone up 78 per cent - from £69 billion to £123 billion. Most of this rise can be attributed to fiscal drag.

Stamp duty on house sales has also become an important source of revenue. It rose from £675 million in the last year of John Major's government to £5.5 billion last year.

Inheritance tax revenue has risen from £1.6 billion to £2.9 billion, while income from capital gains tax has more than doubled from £1.1 billion to £2.3 billion in eight years.

Because house prices are so much lower in the North, many see inheritance tax and stamp duty as a levy on southerners.

The question is, do you think you are getting that increased value back in the public services?

November 5, 2005 in Your Tax Money at Work | Permalink

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Comments

"Over the past eight years, for instance, the revenue from income tax has gone up 78 per cent - from £69 billion to £123 billion. Most of this rise can be attributed to fiscal drag."

Actually, quite a large chunk of that can be attributed to something we call 'inflation'. Those are *current* figures, ie cash terms *unadjusted* for inflation. Not a very good basis for a trend, is it?

The Telegraph story really is exceedingly dumb. Look at their nice graphics which apparently show the increase in tax as a proportion of income in the last 8 years. The major component of the increase in tax is stamp duty, because they assume that their hypothetical household pays several thousand pounds stamp duty *every year*, which can only mean that they buy a house *every single year*.

It's idiotic. The Treasury and others pointed out as much last year, and yet they've done exactly the same thing this year. And gullible types like yourself have swallowed it again.

Posted by: Jim | Nov 5, 2005 9:49:11 AM

What's "fiscal drag"?

Posted by: P. Froward | Nov 5, 2005 3:54:02 PM

Does it mean Greenspan dressed up as Thatcher for Halloween again?

Posted by: P. Froward | Nov 5, 2005 3:56:16 PM

"Fiscal drag" implies inflation. It's simply the phenomenon that wages will tend to rise with inflation, and push employees into tax brackets that were never originally intended for them. (Hence the alternate name, "bracket creep"). When you have a nice big spurt of inflation and no action taken to adjust tax brackets accordingly, you get the combination of high inflation and a stagnant economy (crushed by tax rises) that made the 1970s so much fun for, well, nobody.

Minor nitpicking about how often higher-rate taxpayers buy houses should not obscure the main point of the article, which is that the current government is draining ever-greater amounts of money out of the productive economy and spending most of it on hiring jackasses like the managers of Grantham Hospital.

Posted by: xj | Nov 5, 2005 10:55:17 PM