Great news for people who want to soak the rich. Anyone on 52% Income Tax and NI is paying much more when you take into account tax on their typical purchases.
The following are the marginal rates of tax if a well paid person wants to pay for something,as well as paying the income tax –
Normal purchase of an item carrying 20% Vat: 61.6%
Purchase of petrol or diesel 84.0%
Purchase of BBC licence fee or Council car park ticket 100.0%
Payment of Council Tax 100.0%
Indeed, arguably the marginal tax rate in the case of paying other taxes is much higher. In order to pay £1 of Council Tax the higher earner has to earn £2.08 gross to make the payment: a marginal rate of 208%. If a higher income person has to pay £2500 a year of Council tax on their executive home, they need a gross income of £5200 just to pay the tax. Tax is usually by far the biggest item in any higher earner’s budget.
A higher earner using a car might pay £3000 in petrol tax and car tax, with perhaps another £1000 in congestion charges and state parking fees. That would be another £8300 gross income needed to pay those taxes.
The UK tax system makes sure the better off pay much more, by taxing and taxing again.