This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.guardian.co.uk/money/2013/jul/10/income-gap-poorest-richest-ons
The article has changed 3 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| Income gap between poorest and richest at 26-year low | Income gap between poorest and richest at 26-year low |
| (2 months later) | |
| The poorest fifth of UK households lost almost a third of their disposable incomes in indirect taxes such as VAT, alcohol and fuel duty in 2011/12, according to official figures showing the impact of tax and benefits on consumers. | The poorest fifth of UK households lost almost a third of their disposable incomes in indirect taxes such as VAT, alcohol and fuel duty in 2011/12, according to official figures showing the impact of tax and benefits on consumers. |
| However, the data also showed that once income tax is taken into account, the total amount paid to the taxman is similar – and the equality gap in disposable incomes is at its lowest level since 1986. | However, the data also showed that once income tax is taken into account, the total amount paid to the taxman is similar – and the equality gap in disposable incomes is at its lowest level since 1986. |
| The Office for National Statistics (ONS) said the increase in the rate of VAT from 17.5% to 20% in January 2011 helped drive the amount of indirect tax paid by the lowest earners up to £3,400 a year, or 29% of their disposable cash. | The Office for National Statistics (ONS) said the increase in the rate of VAT from 17.5% to 20% in January 2011 helped drive the amount of indirect tax paid by the lowest earners up to £3,400 a year, or 29% of their disposable cash. |
| In contrast, although the richest fifth of households paid two-and-a-half times as much, at an average of £8,700, the difference in their earnings meant this was just 14% of their disposable income. "This means indirect taxes act to increase inequality of income," the ONS said. | In contrast, although the richest fifth of households paid two-and-a-half times as much, at an average of £8,700, the difference in their earnings meant this was just 14% of their disposable income. "This means indirect taxes act to increase inequality of income," the ONS said. |
| When viewed as a percentage of expenditure, the proportion of indirect taxes paid also falls as you move up the income scale, so while tax accounted for 21% of expenditure among the poorest fifth, it made up 17% of expenditure among the richest fifth. | When viewed as a percentage of expenditure, the proportion of indirect taxes paid also falls as you move up the income scale, so while tax accounted for 21% of expenditure among the poorest fifth, it made up 17% of expenditure among the richest fifth. |
| Unions said the figures showed the government should prioritise lowering the rate of VAT rather than increasing the personal income tax allowance to £10,000, a key pledge of the Liberal Democrat leader, Nick Clegg. | Unions said the figures showed the government should prioritise lowering the rate of VAT rather than increasing the personal income tax allowance to £10,000, a key pledge of the Liberal Democrat leader, Nick Clegg. |
| The TUC's general secretary, Frances O'Grady, said: "Low-income families will gain virtually nothing from the increase in the personal allowance, but will continue to lose significantly from the rise in VAT. | The TUC's general secretary, Frances O'Grady, said: "Low-income families will gain virtually nothing from the increase in the personal allowance, but will continue to lose significantly from the rise in VAT. |
| "Contrary to what ministers claim, the government's tax policies are having a negative impact on the poorest households." | "Contrary to what ministers claim, the government's tax policies are having a negative impact on the poorest households." |
| Across the board UK households saw their disposable incomes fall by £1,200 in the three years following the financial downturn, but changes in taxes and benefits meant that inequality between the bottom fifth and top fifth of households in terms of earning was reduced. | Across the board UK households saw their disposable incomes fall by £1,200 in the three years following the financial downturn, but changes in taxes and benefits meant that inequality between the bottom fifth and top fifth of households in terms of earning was reduced. |
| While the richest fifth of households saw incomes fall by 6.8%, driven in the main by falling earnings, changes to benefits and taxes meant the average income for the poorest fifth were up by 6.9%. | While the richest fifth of households saw incomes fall by 6.8%, driven in the main by falling earnings, changes to benefits and taxes meant the average income for the poorest fifth were up by 6.9%. |
| Before taxes and benefits, the richest fifth of households had an average income of £78,300 – 14 times greater than the poorest fifth whose incomes averaged £5,400. | Before taxes and benefits, the richest fifth of households had an average income of £78,300 – 14 times greater than the poorest fifth whose incomes averaged £5,400. |
| However, the ONS said that once cash benefits such as the state pension and tax credits were factored in the ratio dropped to six-to-one, with the top fifth earning £80,700 a year compared with the poorest fifth's £12,900 average. | However, the ONS said that once cash benefits such as the state pension and tax credits were factored in the ratio dropped to six-to-one, with the top fifth earning £80,700 a year compared with the poorest fifth's £12,900 average. |
| The gap was down from the previous year when the richer fifth earned 16 times the poorest households. | The gap was down from the previous year when the richer fifth earned 16 times the poorest households. |
| Direct taxes cost households an average of £7,400 over the year, equivalent to 20% of their gross income. The poorest fifth paid around £1,300 or 10% of income, of which the largest component was council tax. | Direct taxes cost households an average of £7,400 over the year, equivalent to 20% of their gross income. The poorest fifth paid around £1,300 or 10% of income, of which the largest component was council tax. |
| The richest fifth of households paid £19,900 or 25% of gross income, of which most was income tax. | The richest fifth of households paid £19,900 or 25% of gross income, of which most was income tax. |
| Looking back at longer-term trends, the ONS said the average disposable income of a UK household was 2.24 times higher than in 1977, but that incomes had not grown evenly. While the average income of the richest households was 2.49 times higher, among the poorest households incomes were 1.93 times greater. | Looking back at longer-term trends, the ONS said the average disposable income of a UK household was 2.24 times higher than in 1977, but that incomes had not grown evenly. While the average income of the richest households was 2.49 times higher, among the poorest households incomes were 1.93 times greater. |
| Our editors' picks for the day's top news and commentary delivered to your inbox each morning. |