The Institute for Fiscal Studies is correct to point out that the poor will be paying more stealth taxes in the next few years (IFS: Millions in Britain ‘face stealth tax raid’ under Liz Truss’s plans, 6 October). This has been the tax policy since the Thatcher government in 1979, as the balance has shifted from direct to indirect taxes or – to put it another way – from progressive to regressive taxation. It’s a move away from using tax as a tool to redistribute income, reducing the high rate of tax from 83% to 60% and the basic rate from 33% to 30%. This is now 45% and 19%. The same is true of corporation tax, which has reduced from 52% in 1979 to 19% today.
In this period of Tory government, from 2010, corporation tax for large companies, including banks, Facebook and Amazon, has reduced by a third from 28% to 19%. That alone has cost £18bn a year. This drop in tax take from direct taxes has been replaced by VAT increases from 10% in 1975 to 20% today, and increases in fuel and alcohol duties, and other stealth taxes. That is why the poverty gap between high- and low-income earners has mushroomed since the 1970s, and why we live in a much less equal society today than we did in 1978.
Truss is continuing this downward spiral, where low earners pay more and more in tax, and the divide between rich and poor becomes wider. We have the wrong type of taxation, and we need a long overdue national debate about the role tax plays in reducing inequality.
Barry Kushner
Liverpool
