Imagine that you were reviewing all your household expenditure: your utility bills, your mortgage, your car, your mobile phone, your annual holiday. What would be the single biggest item? If you are in work, there is no doubt: it would be your consolidated tax bill. According to the ONS, the average household pays 33.5 per cent of its income to the state, not including the taxes which businesses are obliged to pass on to their customers and employees. The average figure, of course, takes account of pensioners, students, benefits claimants and the nearly 40 per cent of the population who pay no income tax. In a working household, the figure would be far higher.
Few of us realise it, of course, because the costs are disguised and distributed. Income tax and national insurance are confiscated at source. VAT is built into the advertised price of what we buy. So, in effect, are duties on alcohol, petrol, tobacco and air travel. One of the reasons that council tax arouses so much controversy is that, for many people, it is the only time they feel they are making a direct payment to the state. For a fuller sense of quite how much most of us pay, watch this superb clip from the TaxPayers’ Alliance.
The same is not true of grants, subsidies and benefits: everyone knows exactly what they’re worth. Their recipients are therefore much more easily roused than those who are footing the bills. The same person may, of course, be in both categories. Many higher rate taxpayers become incandescent about losing their £20-a-week child benefit entitlement, while uncomplainingly handing over hundreds of pounds a week in the diverse forms of taxation that sustain the social security bureaucracy.
Economists refer to the phenomenon as “dispersed costs, concentrated gains”, and we saw a physical manifestation of it at this event on Saturday. Where, though, are the far greater numbers who would stand to gain from a reduction in the size of the state? Where is the British tea party? Part of the problem, of course, is that people with jobs generally have better things to do than protest.
None the less, even those on the state payroll ought to be worried about our ballooning debt. If, for example, you teach in a state school, take a quick dekko at the chart below (hat-tip Peter Hoskin at Spectator Coffee House) and ask yourself whether it is feasible to carry on borrowing on this scale.
I was pleased to see a Facebook group planning a Rally Against Debt on 14 May. Congratulations to the organisers, and good luck.
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