Many people get cross that those who earn large sums of money are able to avoid paying tax due to loopholes in the system. If they take the payment in dividends, for example they can avoid tax. Recently the chancellor has said that he wants to address this problem.
Many people get annoyed that those who have lots of money, can afford to pay an accountant who will give them the information they need to avoid paying large amounts of tax. In fact this happens so often, that the government reduced the high level tax amount from 50% to 45% to try to get more people to pay it.
The labour government did not see it as a problem. They felt that the high earners tended to own successful businesses and were giving lots to the economy because of the amount of people that they employed. However, the coalition government do not agree. They are trying to pay off the national debt and so they want to get all of the income that they can from that.
One way that the chancellor is going to stop this tax avoidance is by reducing the amount that they can pay to charities. Of course, charities are not happy about that.
This is a controversial issue, but there is a tax system in place and it should be set up so that it is fair. It should not be possible for someone on an income of £20,000 to pay more tax than someone earning millions. This is obviously not always the case, but the fact that it is even possible, means that the government needs to do something to fix it.
However, if you look at the statistics, it seems like most people who should be paying over 50% in tax, actually are doings o, not being able to find ways to avoid it. This means that it is likely that the drop to 45% tax will actually cost the government money, even if it manages to gain the £6 million it has lost through people being clever enough to avoid paying.
It is a difficult argument really as those who don’t pay that high a tax level are happy for it to remain high, but those who pay it, would like it reduce. No one likes paying too much tax, but they are usually happy if other people do.