Why has spending gone up and tax revenue gone down if lots more work?

[JFKvsNixon]

There are nearly a million unemployed people not drawing benefit at any one time because they've been sanctioned. Also an awful lot of unemployed people over fifty who are not able to claim benefits because they have savings, who also don't appear in the unemployment statistics. Then there are the many people who are trying self-employment, setting up small businesses, but who are not able to pay themselves a penny.

 

As I say, a lot of people who are unemployed and have no income, are no longer allowed to claim benefits. Add that to the people who have 0 hours jobs and it's not suprising the tax take is down.

 

The Tories 'success' is not what it seems....

 

Or maybe the other taxes such as VAT, and taxes associated with North Sea oil and house purchases are down dramatically?

[Vague_Boy]

This question is baffling me as we approach the Election.

 

I'm sure many things will baffle you over the next few months, increasing in number as the crucial date approaches. And I bet all of them get turned into the kind of unsubtle political inculcation that characterizes your opening post.

[ubermaus]

This question is baffling me as we approach the Election.

 

The Government probably quite legitimately claims there are millions more people in work than when they came to power yet the figures from their own department show the following:

 

Welfare spending has increased from 99 to 112 Billion

Income Tax revenue has gone down from 202.9 to 202.5 Billion

 

So how can this be, surely the logical assumption would be more people in work then less spent on Benefit and more received in taxation.

 

I suppose the obvious answer is the jobs are very low hours and low paid, and/or we are having to retire much later so people are still working that would previously have been retired.

 

Without wishing to doubt their figures, how can this anomaly be explained?

 

Because the jobs are low paid, zero hours and self employed.

Govt havent created anything.

[Titanic99]

Out of interest Titanic,where are your figures from?

 

They are in here!

 

http://www.ukpublicrevenue.co.uk/total_revenue_2014UKbn

 

---------- Post added 13-03-2015 at 07:55 ----------

 

I'm sure many things will baffle you over the next few months, increasing in number as the crucial date approaches. And I bet all of them get turned into the kind of unsubtle political inculcation that characterizes your opening post.

 

Most think it's a fairly reasonable question to ask, can't see why you seem to have a problem commenting on it.

 

---------- Post added 13-03-2015 at 07:57 ----------

 

There are nearly a million unemployed people not drawing benefit at any one time because they've been sanctioned. Also an awful lot of unemployed people over fifty who are not able to claim benefits because they have savings, who also don't appear in the unemployment statistics. Then there are the many people who are trying self-employment, setting up small businesses, but who are not able to pay themselves a penny.

 

As I say, a lot of people who are unemployed and have no income, are no longer allowed to claim benefits. Add that to the people who have 0 hours jobs and it's not suprising the tax take is down.

 

The Tories 'success' is not what it seems....

 

Surely thought that would reduce the spending on welfare and not increase it.

 

---------- Post added 13-03-2015 at 07:58 ----------

 

I am not sure what your figures refer to, so I will assume they are pre-government (ie. from the last elections) and current.

 

A large part of the increase in social welfare spending is related to the rise of pensions at or above inflation rate. Also in part due to an increase in part-time and low-paid workers as Joker says. I also wonder if despite/due to ATOS' efforts we are actually seeing an increase in disability allowances and so on.

 

Meanwhile tax-revenues have gone down due to a catalogue of factors, companies making less profit than before the crash, the top rate coming down to 45% from 50% (These are after all the people that produce most tax in relative terms) and the slow down in the housing market which drops the stamp-duty income for the state, people spending less, particularly on luxury goods which drops the VAT income.

 

I'm not sure about the rise in Pension being a factor in increased welfare spending, I thought we had to work longer before getting our pension (68 now for me) so surely spending should have gone down on that.

[Cyclone]

This question is baffling me as we approach the Election.

 

The Government probably quite legitimately claims there are millions more people in work than when they came to power yet the figures from their own department show the following:

 

Welfare spending has increased from 99 to 112 Billion

Income Tax revenue has gone down from 202.9 to 202.5 Billion

 

So how can this be, surely the logical assumption would be more people in work then less spent on Benefit and more received in taxation.

 

I suppose the obvious answer is the jobs are very low hours and low paid, and/or we are having to retire much later so people are still working that would previously have been retired.

 

Without wishing to doubt their figures, how can this anomaly be explained?

 

Tax allowances have been increased, for the bottom allowance quite significantly. This might go part way to explaining the very small drop in income tax revenue. Although it's probably a combination of the other factors that people have been mentioning, job share, zero hours, lower pay on average, etc...

 

Re:welfare, that includes a lot of social care and pension payments, as we live longer the pension bill, the care bill and the cost to the NHS is only ever going to increase.

 

---------- Post added 13-03-2015 at 08:20 ----------

 

Surely though if people were unemployed previously they'd come off Benefit and start paying a little tax, so the overall Benefit bill would reduce and tax revenue go up.

 

Out of work benefits are a pretty small fraction of the figure you mentioned at the start.

 

---------- Post added 13-03-2015 at 08:21 ----------

 

I'm more concerned with the fact that the government have doubled the national debt since 2010 and what with all these cuts to services to save money, punishing the most vulnerable in society, just where is all the money going?

 

Are you busy making things up again Mecky. Next you'll be telling us that the economy has halved.

[Staunton]

It will be because the coalition has taken so many of the lowest paid out of paying tax at all. The Tories are very fair that way.

They have nearly put the top rate of tax back to what it was throughout all but the last few nanoseconds of the previous labour government.

 

Of course, it's the fault of the very, very poor, those who earn such low incomes that they don't even reach the tax threshold.

 

And here's me thinking it might have something to do with multimillionaires exercising their freedom and choice to bank in Switzerland, or perhaps the corporate brand and high street players operating their financial arrangements through tax shelters and secrecy jurisdictions. Thank you RonJeremy for being so clear and incisive with your analysis.

[Cyclone]

It worth remembering that income tax only makes up around 30% of the countries tax income.

 

The OP specifically says "Income tax revenue"... I'm assuming the numbers given are accurate though.

[tzijlstra]

I'm not sure about the rise in Pension being a factor in increased welfare spending, I thought we had to work longer before getting our pension (68 now for me) so surely spending should have gone down on that.

 

Despite that it is still a factor, I can't be bothered to look up the figures (maybe later today I will) but the single largest multiplying factor of welfare cost is that of pensions.

 

The factor of pensions is so large that it dwarves every other welfare budget, but pensioners vote, so politicians aren't keen to make it a topic.

 

PS: This is also a key-reason why immigration is necessary, without an influx of new work-force there is no way the country can afford to maintain this pension level long-term.

[psynuk]

As for more people being in work; not claiming unemployment benefit is not the same as being in work, and the tax revenue is down because more people are being paid a lot less.

 

This is true, I don't work and I don't claim anything.

 

The employment figures are massaged and sexed up to a point where they are essentially a fantasy.

The tax take is lower for quite a few reasons, higher low tax threshold, lower high tax threshold, child/working tax credits, hmrc cuts & inability to make corporations pay their dues likewise wealthy folks. The economic crisis leading to reduced mortgage take up, fewer people moving round the property ladder, less building & construction. More people on low hours so not breaking tax threshold. People are generally being a little more cautious with their spending it seems, so vat take is lower..

 

The list of reasons is massive.

[tzijlstra]

This is true, I don't work and I don't claim anything.

 

The employment figures are massaged and sexed up to a point where they are essentially a fantasy.

The tax take is lower for quite a few reasons, higher low tax threshold, lower high tax threshold, child/working tax credits, hmrc cuts & inability to make corporations pay their dues likewise wealthy folks. The economic crisis leading to reduced mortgage take up, fewer people moving round the property ladder, less building & construction. More people on low hours so not breaking tax threshold. People are generally being a little more cautious with their spending it seems, so vat take is lower..

 

The list of reasons is massive.

 

Yes, but if your Anna you have to blame someone, so the massive list argument doesn't work.

 

It is how this whole thing becomes politicised that makes a lot of people confused about the root-cause of the problem, the problem is simple: We are spending too much as a government and too little as consumers. Soon we will be like Japan where everybody has to work all the time just to keep the equilibrium going, in fact, we are probably already worse of, but because we like seeing figures that the economy has grown by a whopping 1% we don't realise it yet.