Chancellor George Osborne has revealed plans for income tax payers to receive a detailed breakdown of what they pay and how Government spends the revenue.
The personal tax statements will be introduced in 2014 and will set out how much people pay in direct taxation such as income tax and national insurance as well as what proportion is used for education, health and welfare and national debt repayments.
The idea was first floated in January by Conservative MP Ben Gummer (pictured), son of Aifa chairman Lord Deben.
Announcing the move at this afternoon’s Budget, Osborne said: “It is a good idea and I intend to introduce it.
“It will mean people can see what they are paying, and how much of it is spent on health, welfare and defence compared to servicing national debt.”
Speaking after the Chancellor, Treasury select committee chairman and Conservative MP Andrew Tyrie said the move is a “huge step forward”.
For example, someone earning just over £25,000 would pay £5,700 in direct taxes. Of that, more than £1,900 would go on welfare and pension payments, nearly £1,000 on health and £750 on education and £360, or 6 per cent would go on national debt repayments.
The personal statements are intended to make the tax system more transparent. They will not take into account indirect taxation like VAT and fuel duty.
In January, Gummer told Money Marketing there is far too much obscurity in the tax system. He said: “Throwing into sharp relief the reality of how tax take is actually spent will make it much clearer and shift public debate.”
For Money Marketing’s full coverage of the Budget click here.