wage claims.
the working class is a bit more 'equal'.
in Britain more highly taxed than in other Bad top Popular item Britain more tax than they answer to both ash that the these questions is a resoundin Indeed, the i of till propaganda in the next general campaign to show they will reverse these self-evident trends.
But it is by no means obvious tal popula wisdom is correct directly on incomes — for example, on people, income tax, on firens, corporation tax. Thes taxes are called direct taxes' Secondly, there are taxes which accied not on incomics out or penditure. Examples are Val dded Tax (VAT), taxes on a tobacco, vehicle excise duty. agricultural levies. These taxes ane called 'indirect taxes.
REGRESSIVE The main economic difference between direct and indirect taxes BUT JOELL LUNGS HITCHICA sive', This means that, for any given purchase, a poor person will pay as much as a rich person Further, more tax will be collected if more people buy the com So to maximise tax revenue, it makes sense to levy taxes on those goods which most people Denmark Sweden UK USA Source: Economic Trends, November 1978 Direct central government taxes on income indirect central government taxes Mates National insurance contributions: - employers Total taxation udget Report 1977-7E. THE MINI-BUDGET Denis Healey revealed last week has been dubbed an 'election package" by the media. But it is also a strenuous effort by the Labour Government to put money into working class pockets in a way that is thing Healey has given us is equality of sacrifice — but huy. If we consider two people, one of whom earns twice as much as the oiber. it is obvious CABl th ricner person wul not purchase twice as much food much tobacco or alcohol as the so ine poore person will pay a much greater indirect tax as a propomon of their income coal will richer person.
IT RACE BIC CAECAINE.
DRAMATIC Contrast this situation wan direct taxes, which are potentially "progressive'. This means that taxe can be avid on incomer accordIng 1o abily Richer people not only can WALE ME TECH LODIED they can also percentage of their income is tax people.
redistributing incomes egalitarian manner in a way that and пото такся сапао!
Now let us look at the situation today. First of all, how does the indirect taxes) as a percentage of gross national product in Britain compare with other countries?
Table A shows that it cannot at all be calmed that the burden of taxation in Entain is heaver coal. comparable However, what has happened over the last few years is that the components of the tax burden in Britian bave altered dramatic: ally. This can be seen from Table Tax burden as a percentage of GNP at factor cost, 1974 Including social Excluding social Secunt contributions contributions $3.4 52.4 49.1 34:4 24.9 32.0 SH.S 32.0 24.3 42.5 38.0 31.4 20.0 TABLE B Composition of the tax burden (excluding taxes on capital| 1978-77* ace Annual Abetract of Statistica, Financial Statement and This change in The composition of the tax burden has occurred because of inflation. As mone allowances remain many more people find them 2,000,0K0 pay income tax today who paid none in 1973-74 FISCAL DRAG comes rene, tee do pay lat Furthermore, find that an increasing propor tion of their income is taxed and reasingly high rates or twice as: in 1071.73. heloren XKENO 1n0 400,000 people paid surtax; te 1975-76 wel over if tax, But because prices wer rising rapidly, this Thus THLTENSILE mean that people were becoming better off Bere off ite taxed more: Thi in real terms e effect of inflation is known as 'Gical drag' Turning to indirect taxes, many taxes are levied at a fixed sum per quantity of the commodity pur CASCE LILLI pay. alcohol for example. As prite pay rise, the Fixed sum decreases Proportion Di the Dose Ol commodity in process of erosion of fined sum Thus *fiscal boost' Now despite increases in perolds, and in rates of duty, these increases have not been sufficient to offset the effects of inflation. LUCE PANE been shifting strongly towards CITELL PAULION. indirect taxation.
Because direct taxation is progressive and is regressive, this tendency continues lead to a structure of taxation when truene cerence in ould have eal incoone distribution of Encome thing thind be a and thing But capitalist economies do on run on equity. order to revive the epopomy to create a climate in which vestment is seen as worthwhile One af the ways of doing this is to make it clear that capitalises wil pet richer if they invest, that the return they get will not just be taxed away. In this way, the class nasareof Britain willcontinueto be TELECLETE huge incomes and living.
MORIBUND That is way Healey's budget alowances rather than reduced VAT. That is why the clamour in the Tory press and Parly has focussed on our ruinously" high rate of income increasing burden of direct taxa live to effon. And as long as the abour Government is commitcribund capitalist pril's budg equalityof sacrifice — but the poor are more equal than the rest.
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designed to dampen militancy in the struggle around Below we examine what lies behind Denis Healey's attempt to juggle tax figures and conclude that the only