{"id":8010,"date":"2022-10-11T09:51:00","date_gmt":"2022-10-11T08:51:00","guid":{"rendered":"https:\/\/www.taxpolicy.org.uk\/?p=8010"},"modified":"2024-01-04T19:12:25","modified_gmt":"2024-01-04T19:12:25","slug":"four-infographics","status":"publish","type":"post","link":"https:\/\/heacham.neidles.com\/2022\/10\/11\/four-infographics\/","title":{"rendered":"The UK tax system in five infographics, and what we can learn from the fact they are boring"},"content":{"rendered":"\n<p>The chart above shows the composition of the UK tax system &#8211; the contribution made by each of the different taxes.<sup class=\"modern-footnotes-footnote \" data-mfn=\"1\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8010\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8010-1\">1<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8010-1\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"1\">Sources are <a rel=\"noreferrer noopener\" href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/1091378\/HMRC_Annual_Report_and_Accounts_2021_to_2022_Web.pdf\" target=\"_blank\">here<\/a> for most of the taxes, <a rel=\"noreferrer noopener\" href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/1108764\/Collection_rates_for_Council_Tax_and_non-domestic_rates_in_England__2021_to_2022__revised_.pdf\" target=\"_blank\">here<\/a> for local government taxes and <a rel=\"noreferrer noopener\" href=\"https:\/\/obr.uk\/forecasts-in-depth\/tax-by-tax-spend-by-spend\/vehicle-excise-duty\/\" target=\"_blank\">here<\/a> for vehicle excise duty (the latter being a forecast, not an outturn)<\/span><\/p>\n\n\n\n<p>It must have seen dramatic changes over the last forty years:<\/p>\n\n\n\n<p>Not really:<sup class=\"modern-footnotes-footnote \" data-mfn=\"2\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8010\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8010-2\">2<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8010-2\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"2\">Thanks to the IFS who <a href=\"https:\/\/ifs.org.uk\/taxlab\/taxlab-data-item\/ifs-revenue-composition-spreadsheet\" target=\"_blank\" rel=\"noreferrer noopener\">did all the work here<\/a> &#8211; I just bundled similar taxes together and plotted it<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized is-style-default\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"667\" src=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-26-1024x667.png\" alt=\"\" class=\"wp-image-8032\" style=\"width:766px;height:499px\" srcset=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-26-1024x667.png 1024w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-26-768x501.png 768w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-26.png 1470w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Or, over a longer period, and as a % of GDP<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><img decoding=\"async\" width=\"1024\" height=\"667\" src=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2023\/01\/image-24-1024x667.png\" alt=\"\" class=\"wp-image-8952\" srcset=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2023\/01\/image-24-1024x667.png 1024w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2023\/01\/image-24-768x501.png 768w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2023\/01\/image-24.png 1470w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Obvious conclusions:<\/p>\n\n\n\n<ul>\n<li>The conventional wisdom that tax has moved from taxing income (income tax\/NI) to taxing consumption (VAT) is correct &#8211; but only to a degree. The decline in income tax\/NI is small, and the increase in VAT has been almost matched by a decrease in other indirect taxes\/duties<\/li>\n\n\n\n<li>The conventional wisdom that corporation tax has been slashed (the &#8220;<a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/09\/20\/race\/\" target=\"_blank\">race to the bottom<\/a>&#8220;) is wrong<\/li>\n\n\n\n<li>The complaint that business rates are at historically high levels is wrong<\/li>\n\n\n\n<li>The idea that the EU forced VAT on us, and changed our tax system forever, is also wrong. VAT replaced the various sales taxes, and caused a massive drop in excise duties. The combined total of VAT\/sales taxes\/duties hasn&#8217;t materially changed since the 60s.<\/li>\n\n\n\n<li>Council tax\/poll tax\/rates revenues look much the same, despite the very significant changes over this period<\/li>\n<\/ul>\n\n\n<h2 class=\"wp-block-heading\" id=\"how-does-it-compare-with-the-rest-of-the-oecd\">How does it compare with the rest of the OECD?<\/h2>\n\n\n<p>That looks like this:<sup class=\"modern-footnotes-footnote \" data-mfn=\"3\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8010\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8010-3\">3<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8010-3\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"3\">Thanks to the OECD for the wonderful <a rel=\"noreferrer noopener\" href=\"https:\/\/stats.oecd.org\/Index.aspx?DataSetCode=RS_GBL\" target=\"_blank\">global revenue statistics database<\/a>. I just bundled similar taxes together &#8211; but had to push the taxes into a smaller number of categories than for the UK-only charts above, or cross-country comparisons became impossible<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized is-style-default\"><img decoding=\"async\" width=\"1024\" height=\"684\" src=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-23-1024x684.png\" alt=\"\" class=\"wp-image-8020\" style=\"width:756px;height:505px\" srcset=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-23-1024x684.png 1024w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-23-768x513.png 768w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-23.png 1624w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Comparisons are easier if we normalise, and order by the total % of tax collected in income tax and social security\/national insurance:<sup class=\"modern-footnotes-footnote \" data-mfn=\"4\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8010\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8010-4\">4<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8010-4\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"4\">I&#8217;m bundling employer and employee SS\/NI together, because all the evidence is that, in the long term, employees bear the economic burden of employer labour taxes, i.e. because a business will generally keep its overall labour costs constant as taxes increase, so take-home wages fall (Again, in the long term)<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"684\" src=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-24-1024x684.png\" alt=\"\" class=\"wp-image-8021\" style=\"width:744px;height:497px\" srcset=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-24-1024x684.png 1024w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-24-768x513.png 768w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/image-24.png 1624w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p> What can we conclude from this?<\/p>\n\n\n\n<ul>\n<li>The tax system most similar to the UK is Portugal, which I find surprising &#8211; although Portugual collects somewhat more in VAT and other indirect taxes, and the UK collects somewhat more in capital\/land taxes<\/li>\n\n\n\n<li>Amongst the countries similar to the UK &#8211; large developed economies with relatively generous welfare states, the UK has the smallest overall tax as a % of GDP, the smallest overall tax % collected from individuals\/wages, and the largest from capital\/land taxes.<\/li>\n<\/ul>\n\n\n\n<p>But we shouldn&#8217;t exaggerate these differences. There are obvious large variations in total tax as a % of GDP between countries, but it&#8217;s remarkable how &#8211; aside from a couple of outliers<sup class=\"modern-footnotes-footnote \" data-mfn=\"5\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8010\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8010-5\">5<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8010-5\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"5\">Chile!<\/span> &#8211; the differences in tax composition between countries is relatively small. <\/p>\n\n\n\n<p>Another way to look at this is to plot the % of tax on the wages of the average worker (i.e. income tax, and employee\/employer&#8217;s national insurance only) against the level of state spending in each OECD country:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"725\" src=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2024\/01\/image-10-1024x725.png\" alt=\"\" class=\"wp-image-13756\" srcset=\"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2024\/01\/image-10-1024x725.png 1024w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2024\/01\/image-10-768x544.png 768w, https:\/\/heacham.neidles.com\/wp-content\/uploads\/2024\/01\/image-10.png 1760w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>It&#8217;s notable that there&#8217;s no country in the world which taxes the average worker less than the UK, but has higher government spending.<\/p>\n\n\n\n<p>We should therefore be sceptical of anyone who claims that we can radically change the balance of taxation and [eliminate corporate tax][tax corporates more and people less][tax land more and everything else less]. International experience suggests our options are limited to fiddling at the margins here and there<sup class=\"modern-footnotes-footnote \" data-mfn=\"6\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8010\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8010-6\">6<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8010-6\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"6\">Don&#8217;t knock it! -almost everything I write is about fiddling at the margins<\/span> or, more <a href=\"https:\/\/youtu.be\/ik8JT2S-kBE\" target=\"_blank\" rel=\"noreferrer noopener\">courageously<\/a>, choosing to significantly increase or decrease the size of the state, and therefore decrease or increase most people&#8217;s taxes, and the public services they fund. <\/p>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<ul class=\"modern-footnotes-list \"><li><span>1<\/span><div>Sources are <a rel=\"noreferrer noopener\" href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/1091378\/HMRC_Annual_Report_and_Accounts_2021_to_2022_Web.pdf\" target=\"_blank\">here<\/a> for most of the taxes, <a rel=\"noreferrer noopener\" href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/1108764\/Collection_rates_for_Council_Tax_and_non-domestic_rates_in_England__2021_to_2022__revised_.pdf\" target=\"_blank\">here<\/a> for local government taxes and <a rel=\"noreferrer noopener\" href=\"https:\/\/obr.uk\/forecasts-in-depth\/tax-by-tax-spend-by-spend\/vehicle-excise-duty\/\" target=\"_blank\">here<\/a> for vehicle excise duty (the latter being a forecast, not an outturn)<\/div><\/li><li><span>2<\/span><div>Thanks to the IFS who <a href=\"https:\/\/ifs.org.uk\/taxlab\/taxlab-data-item\/ifs-revenue-composition-spreadsheet\" target=\"_blank\" rel=\"noreferrer noopener\">did all the work here<\/a> &#8211; I just bundled similar taxes together and plotted it<\/div><\/li><li><span>3<\/span><div>Thanks to the OECD for the wonderful <a rel=\"noreferrer noopener\" href=\"https:\/\/stats.oecd.org\/Index.aspx?DataSetCode=RS_GBL\" target=\"_blank\">global revenue statistics database<\/a>. I just bundled similar taxes together &#8211; but had to push the taxes into a smaller number of categories than for the UK-only charts above, or cross-country comparisons became impossible<\/div><\/li><li><span>4<\/span><div>I&#8217;m bundling employer and employee SS\/NI together, because all the evidence is that, in the long term, employees bear the economic burden of employer labour taxes, i.e. because a business will generally keep its overall labour costs constant as taxes increase, so take-home wages fall (Again, in the long term)<\/div><\/li><li><span>5<\/span><div>Chile!<\/div><\/li><li><span>6<\/span><div>Don&#8217;t knock it! -almost everything I write is about fiddling at the margins<\/div><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The chart above shows the composition of the UK tax system &#8211; the contribution made by each of the different taxes. It must have seen dramatic changes over the last forty years: Not really: Or, over a longer period, and as a % of GDP Obvious conclusions: How does it compare with the rest of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":8039,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[88],"tags":[],"jetpack_featured_media_url":"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/10\/chart.png","_links":{"self":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/8010"}],"collection":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/comments?post=8010"}],"version-history":[{"count":27,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/8010\/revisions"}],"predecessor-version":[{"id":13758,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/8010\/revisions\/13758"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/media\/8039"}],"wp:attachment":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/media?parent=8010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/categories?post=8010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/tags?post=8010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}