Despite the state of the nation’s finances, the tax year of 2010-2011 saw the UK income tax take hit a record high of Â£153 billion says HMRC.
The total taken from taxpayers by HMRC over the year was over Â£447 billion, which is only a little under the previous peak of Â£451 billion in 2007-2008 just prior to the credit crunch biting says Ian Cowie in the Telegraph.
It also seems that the last increase in VAT from 17.5% to 20% has boosted the coffers by Â£15 billion from Â£70 billion to Â£85 billion. And the take from National Insurance Contributions rose to Â£97 billion.
With other tax changes that have come into effect such as the 50% rate for higher earners this increase in the government’s share of our earnings looks set to increase further.
Richard Mannion, a director of accountants Smith & Williamson, is quoted in the Telegraph as saying: "Taxes have risen while the economy has remained flat and that scenario is likely to be repeated in the current tax year, 2011/12.
"The main factors are the increase in VAT and increases in income tax payable by the better-off, rather than an economic recovery. Total income tax set a new record in 2010/11 which presumably reflects the new 50pc top rate and the loss of personal allowances for better off taxpayers under Pay As You Earn (PAYE)."
The Telegraph points out that these figures have not been ‘announced’, just updated on their web-site.
This update may also explain why the government is taking a fresh look at taking Child Benefit away from higher earners. It may also be why the government is a bit shy in getting rid of the 50% tax bracket now as the figures indicate that taxing the rich does actually make a difference.
The Chancellor may therefore now have more wriggle room than previously thought allowing them to review their stance on cuts. But they have already painted themselves into a bit of a corner on that one. The coalition taking a softer approach will be a lifeline that Ed Miliband will gleefully grasp. He could also point out that if we’d also taxed the bankers a bit more as he has suggested then the public finances would be in an even better position and the cuts could be scaled back as well.
Good stuff for the next PMQs?