Ben Gummer's Ten-minute Rule Bill

Ben Gummer MP has proposed sending every taxpayer a statement to show where his taxes go, to put government spending into perspective, as reported in today's Soaraway Sun. Clearly it makes a lot of sense to express spending in terms of £100 per taxpayer rather than just waving around these billions and trillions at national level.

They've produced a sample statement, showing that an average earner on £26,000 pays £6,134 income tax/employee's NIC, £803 of this is spent on old age pensions, £236 on housing benefit and so on.

I like the general principle, but I have a big quibble...

... the statement only shows PAYE (income tax and employee's NIC) deducted from wages (you can check here, using 2010-11 rates) even though these only accounted for only just over a third of all taxes collected (£180 billion out of £530 billion) in that year.

According to the Public Sector Finances Databank for 2010-11, total taxes collected were £530 billion, divided by 32 million employees/self-employed gives us an average tax bill of £16,500 per annum, quite significantly more than the £6,134 which the government The Sun acting on behalf of the government pretends an average (median?) earner on £26,000 pays, eh?

Adding on the figure for Employer's NIC (another £50 billion) would be very easy; VAT (£86 billion) averages out at (say) seven per cent of people's gross wages (or a third as much again as income tax and two layers of NIC); then there's duties (petrol, booze fags, £70 billion) Council Tax, Business Rates (£25 billion each); corporation tax (£30 billion, which is ultimately borne by individuals); £22 billion in income tax collected via Self-Assessment and so on.

Further, total government spending in 2010-11 was £687 billion, minus 'gross operating surplus' (whatever that is) and the deficit was (say) £120 billion, so yer average earner is also being lumbered with another £4,600 in debt on top of the £16,500 tax he was paying/bearing.

If you then go back and rework the spending figures based on £21,100 tax rather than £6,134, it would be more like £2,700 for pensions (not £803), £800 for Housing Benefit (not £236) and so on, which seems more realistic to me (i.e. total pensions spending £85 billion divided by 32 million employees/self employed = £2,700, total nominal Housing Benefit bill £25 billion divided by 32 million = £800).

Then we could include a notional figure for the cost of major tax breaks, so if pension tax breaks are £44 billion a year, that's £1,400 for each employee/self-employed person. If you're a pension saver, that's less than the value of the tax breaks to your pension company (not to you, they are worthless to you) and if you have no truck with pensions companies, that's what the razzmatazz is costing you in extra tax, and so on.