Hard-hit families 'pay worst taxes'

walletPeter Byrne/PA.

Financially stricken families across the UK are being hit with the world's worst tax rates, according to a study.

Research shows households with two adults and two children containing one earner are paying around 73% in tax - made up largely from income tax, national insurance contributions and the removal of some benefits - higher than any other country in the developed world.
Social policy charity Care (Christian Action Research and Education) said it meant such a household would take home 27p for every £1 earned, describing the UK as the "worst place to facilitate the creation of an aspiration nation", as highlighted by David Cameron during his party's conference in Birmingham in October.

Care chief executive Nola Leach said: "Our tax system remains very individualistic and insensitive to family responsibility, compared to those of comparable OECD (Organisation for Economic Co-operation and Development) countries."

The report demonstrates that the UK's Marginal Effective Tax Rate (METR) - based on a married couple, with two children, where one parent stays at home while the other goes to work, earning 75% of the average wage - is much higher than the countries with the second and third highest tax rates - Ireland (64%) and Canada (61%).

By comparison, Chilean families with one bread-winner pay just 7% tax - the lowest in the developed world, according to Care's research. The charity says the UK's tax rate is scuppering it from becoming an "aspiration nation", something championed by the Prime Minister as he closed the Conservative Party conference in October.

He told delegates: "Let us here in this hall, here in this Government, together in this country make this pledge - let's build an aspiration nation. Let's get Britain on the rise."

Care say their findings come despite the Government's pledge to recognise marriage in the tax system through the introduction of a transferable allowance.

The Conservatives promised such an allowance - worth £150 a year to married couples - in their election manifesto. And Chancellor George Osborne has faced fresh calls from within his own party to recognise marriage in the tax system in next week's Autumn Statement.

Ms Leach said: "Recognising marriage in the tax system would help bring the UK back into line with its international counterparts and go some way to address the problems highlighted by today's research. It is unfortunate that the coalition Government still has not introduced the necessary legislation."

© 2012 Press Association
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