Wednesday, March 21, 2007

Ming right, Blair wrong on taxation

Before today's budget came prime minister's questions, when the Guardian reports that the following exchange took place:

Sir Menzies Campbell's turn - is the PM "disappointed" that the wealth gap is greater under him than Mrs Thatcher?

"He is absolutely wrong," counters Mr Blair - the wealthy are wealthier but those at the bottom have done very well. "Yes, we haven't penalised high earners but those at the bottom have done well."

Sir Ming is undeterred - "how can it be fair" he asks, that the lowest earners pay a higher proportion of their wage in income tax than the highest?

He's simply incorrect, Mr Blair repeats.
Except that Sir Ming was quite right.

As Richard Murphy says:
It’s staggering that after 10 years on office he doesn’t realise that what he said is wrong and that Ming Campbell is absolutely right. The data is here - published in Parliament. The lowest decile pay 42.6% of their income in tax. Their average income is £8,376 The highest decile pay just 34.9%, less than the fifth to ninth deciles it should be noted. Their average income is £84,357.

What a legacy for a Labour Prime Minister.
Thanks to Tim Worstall.


Edis said...

One small (?) problem to sort out before we go to town on this, to block off a Balir escape route.

Ming said 'Income tax'. What he should have said is 'proportion of Income in Tax'.

The bottom decile pay more in tax overall despite having a lower direct tax (income tax) burden.

Lets sharpen this up before Blair wriggles out by concentrating on Income Tax.

Simon said...

This is the problem with tax. It's so easy to put the tax burden up and use the misdirection of a reduction of the "pee in the pound"

It's like watchin a very sinister magician.