The tax system in the United Kingdom

The government of the United Kingdom, likewise the government of many other countries, raises money to spend on public services towards the tax system. The taxes are raised by two different levels of government, the HMRC, Her Majesty’s Revenue and Customs, and the local governments, as Barnet, Islington, Camden, Haringey, among others twenty nine local authorities in London, for instance. While the HMRC deduces taxes through Income tax, National Insurance contributions, VAT, corporation tax and fuel duty, local governments are responsible for business rates, council tax and other fees, such as on-street parking. In turn, the money deducted for tax purposes are applied to improve the health, education, social services and social security system. There are different types of taxes for different circumstances, for example, you have to earn above a certain limit to qualify for income tax and if you are self-employed you may be entitled to claim back much of your VAT (BBC, 2009).

Although in the UK relative poverty is more predominant than absolute poverty, it does not mean that it is a problem that should be left behind. The immense difference between the income of a rich person and a poor person addresses the issue to be understood since its causes up to its reduction or, optimistically, its abolition. The UK tax system is used as an attempt to reach both horizontal and vertical equity, therefore reducing inequality and poverty. The horizontal equity remotes to the fact that people in the same financial situation are able to pay taxes on the same basis and should be charged the same rate. Meanwhile, the vertical equity proposes that individuals in diverse financial situations have different abilities to pay taxes, so the charges sho...

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...e final income, shortening the difference between rich and poor.

In general, it can be said that the tax system in the United Kingdom attempts to reduce inequality and poverty, although it is seen by many as an unclear and unfair system. Tax scams and other avoidance measures are symptoms of a wider malaise in a regime that need to be more transparent and fairer (Telegraph View, 2014). However, for those in lower pay employment, its effectiveness can be seen through the income tax, which will deduce between 10% and 20% of their final income, compared to 40% to 50% of those in higher pay. In addition, measures such the national minimum wage and benefits in-kind guarantee that individuals in lower pay are provided with a minimum standard of payment as well as services that might not be easily accessible for them as much as there are accessible for wealthy people.