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How Things Work

Cos I'm the Taxman.
Yeah, I'm the Taxman
And you're working for no-one but me
The Beatles купить произведения The Beatles
It's time to come out from the shadows. Citizens: pay your taxes. a document from the 17th century calling for equality

These are phrases that the average man on the street in the UK never hears, for although he dislikes the taxman as much as his Russian counterpart, tax is a more or less accepted, and more importantly, an automated way of life.

A truly vast amount of the government's money is earned from income tax, and if people in Britain all avoided paying tax then there would be no road, no hospitals, no police and no country!

How it works:

There are three main taxes that affect people in Britain. Income tax is when the government takes a proportion (usually 20%) of your pay, before your boss actually pays it to you. It is his responsibility to work out the amount of tax and deduct it from your pay packet and give it to the government.

Income tax in Britain is progressive. That means that the more you earn the bigger the slice of cake taken by the government. If you are a well-paid worker, for example a doctor or solicitor, then you can expect to lose forty percent of your salary to the taxman. To many people it seems unfair that the most successful members of society should pay more in tax than others, but in reality it's quite a different matter. Because a lawyer or businessman can earn a very large income (say, one hundred thousand pounds a year), then after the amount of tax he or she pays is deducted they will still have a very large amount of disposable income to spend on the good things in life. Compare this state of affairs to a poor nurse who earns about ten thousand pounds a year. Despite this small amount a nurse still has to pay the basic rate of tax (the so called minimum), which is twenty percent. This leaves, well you can work it out for yourself, and it is no wonder that there is a chronic shortage of nursing staff in Britain's hospitals!

The second main tax is VAT, which stands for Value Added Tax. This tax is levied on most goods and services such as clothes, CDs, cars, etc. This tax affects everyone in the same way, as we all have to buy clothes to wear, fuel for heating and electricity to light our homes.

A third tax, but just as important as the others is Excise Duty. This is a special tax on tobacco, alcohol and oil. Even if the price for these goods goes up the demand doesn't change much as people consider them essential for their lives, and so the government can raise a lot of money quickly by raising the excise duty on cigarettes, beer and wine, and most importantly petrol.

It was this last tax - on petrol that led to Britain being brought to a standstill by angry farmers and lorry drivers in the autumn of 2000. Because of high oil prices these groups, who depend on transport for their jobs found it difficult to make ends meet and demanded that the government reduce the tax on petrol. When this failed to happen they blockaded oil refineries and petrol stations. For more than two weeks it was impossible to buy petrol. People couldn't get to work, shops couldn't keep supplied, hospitals and schools found it difficult to stay open. Eventually a settlement was reached and the blockade was lifted. The episode showed how dependant we all are on petrol supplies and how close civilisation is to the brink of chaos.

a picture from the time of the civil war (1600s)

Another tricky time for the government was in the late 1980s when they attempted to bring in an individual tax on every person living in the UK. This was the infamous Poll Tax and predictably people all over the UK rioted and refused to pay. This was really a repeat of history when the King raised a similar tax in the fourteenth century. Obviously the rulers of Britain had not learnt by their mistakes.

The story behind the Beatles' song at the beginning of this article is an interesting one. In the 1960s Britain had very high income tax. The richest people: rock stars, the aristocracy, stockbrokers etc, were taxed at 95%. This made the Beatles very angry and they wrote a song about it. Now the maximum taxation, even for the super-rich is 40% of income. Do you think this is the right level? What about poor people like teachers and nurses who have to pay 20% tax, even if they earn hundreds of thousands of pounds less than financial experts and film stars? Or do rich people deserve their money and should not have to pay as much tax as the Beatles did in the 1960s? But the most important question is: how will we continue to pay for schools and hospitals, roads and policemen if no-one wants to pay tax? If the richest people don't contribute to the government's wallet, how can services be provided for the poor and needy?

In Britain these questions have yet to be answered.

© Jeremy Moor

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