Ross Clark Ross Clark

Paying Osborne’s bills

I now have to spend more on taxes than I do on my family

issue 12 January 2013

In her early campaigning days as Conservative leader, Mrs Thatcher had the gift of being able to relate the national economy to the domestic finances of ordinary voters. The battle against inflation commenced with her and her shopping basket, nattering away with voters over the cheese counter. It is a skill which David Cameron needs rapidly to discover. Now, as in the 1970s, a political leader who doesn’t understand the personal finances of ordinary people is going to be in deep peril.

Four years ago, realising my income was going to fall, and with a little time on my hands, I started doing something I had never bothered to do before — and during the previous decade had never felt I needed to do: I started adding up every penny I had spent over the previous year. At the time, I found that for every pound I was spending, I was paying 77 pence in income taxes and council tax. Over the past 12 months for every pound I have spent I have paid 85 pence in income taxes and council tax. But of course, a slice of the money I spend also goes in tax, in the form of VAT, fuel duty and excise duty. I am not such a Scrooge that I keep a copy of the receipt every time I buy something, and thus am unable to work out exactly how much I paid in spending taxes, but my bank statements show that I have spent £45,288 (excluding pension contributions and other investments), and paid £38,342 in income tax, national insurance and council tax. On the assumption that about a fifth of my expenditure was on food, newspapers and other zero-rated goods, I spent approximately £7,590 in VAT, £1,040 in road fuel duty (1,800 litres at 58 pence per litre), £250 in road tax and £360 in alcohol duties (the duty accounting for about half the cost of a £7 bottle of wine).

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