HM Revenue & Customs recently sent me an annual tax summary for 2013-2014. This is an interesting document as it shows how my income tax and national insurance contributions were calculated, and how my money was spent by the government. We know that the only certainties in life are death and taxes, but we often treat taxes in abstract and do not think about them in absolute and concrete terms. This new document provides a detailed monetary breakdown of how my taxes were spent excluding indirect taxes such as VAT and other duties.
A quick calculation of my contribution produced the following percentage breakdown:
|National debt interest||7%|
85% of my taxes were eaten up by the above categories. The balance was spent on transport, business and industry, government administration, culture etc. all less than 4% of the total.
I was stunned that welfare payments accounted for 25% of my total tax burden and that national debt interest accounted for 7%, higher than spending on defence at 5%. It should also be noted that state pensions accounted for over a tenth of my personal contribution.
We all have to individually decide if we are happy with the way our hard earned cash is spent. As Thomas Sowell said we all need to think what is the fair share of the money that I have earned that you are entitled to. But what the tax document maeks clear is that if the government is going to successfully reduce the national tax burden on the hard working people and families, then tinkering around the margins is not going to make one iota of a difference. Besides reducing the level of national debt, the only way forward is to tackle the top four categories that accounted for 69% of my taxes. This requires political will that may or may not be there.