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 This drop in tax take from direct taxes has been replaced by VAT increases from 10% in 1975 to 20% today, and increases in fuel and alcohol duties, and other stealth taxes.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.
