Britain’s Unaccountable High Tax Culture

If somebody were interested in the contradictory nature of modern democracy—and its absurdity—they need look no further than Britain. At the time of writing this piece the country has an unelected royal family, unelected prime minister, unelected foreign secretary, unelected House of Lords and an unelected supreme court—and elections have no proportional representation either. Although supposed Anglo-Saxon liberty and individualism has been spread across the world, its presence is limited at home. How is it possible that in a supposed ‘liberal democracy’ we ended up with such lack of accountability? And even with a conservative like me who favours a constitutional Monarchy, the rest of it is still rather galling. 

Yet the one common factor about this system—the part that a lot of people seem to miss—is how it is maintained. There is no organic demand so it’s funded through taxation, because this is the only way such entities could possibly exist. In the same way the Norman Yoke was funded by peasants in England, their descendants are now facing record levies to prop up another unpopular regime. When you take into account income tax, National Insurance, VAT, road tax, fuel tax, and council tax, the de-facto rate in Britain is probably close to 60% for middle earners. And for wealthier individuals there is still a top rate of 45% on income above £125,140, and businesses currently pay one of the highest corporation tax brackets in the world at 19-25%, which makes Britain very uncompetitive.

As a result, disposable income is being squeezed and living standards are falling. A remarkable study predicted that equivalent to 36.2% of annual GDP would be taxed during fiscal year 2023/24. And rather worryingly for all the economists out there, the public sector pension bill currently stands at £2.3 trillion, which is just one trillion short of equalling annual GDP. Then when it comes to education, the student debt bill reached £200 billion last year for the first time, an amount carried by taxpayers until graduates earn enough to pay it back. Yet this all only represents the country’s current woes, because the Institute for Fiscal Studies has predicted that taxes will be increased to raise a further £100 Billion to plug a spending hole caused by rising net migration. This comes as the government’s own economists are telling them to increase migration!

Now of course after reading all that, you make think this would be the end of such absurdity. However, unfortunately, this is just the beginning of Britain’s public sector woes. You see, in order to attract the best talent into departments such as the foreign office, successive governments had the great idea of creating lucrative pension schemes for civil servants. Indeed, the pensions these retirees enjoy are an order of magnitude higher than most British workers could ever dream of, with some reaching £100,000 annually. In other words, British taxpayers are funding the luxurious pensions of civil servants, whilst they themselves will never receive anything close to such a generous amount.

For example, if you consider that the higher rate for a state pension is currently £203.85 a week, totalling a pathetic £10,600.2 a year, then some civil servants are enjoying a pension around ten times higher. Now the question must be asked whether these individuals who are working in departments like the home office are really worth it? Can it be argued objectively that these public sector employees deserve a retirement package higher than the people who fund them? For most, this of course would be very hard to defend, yet for decades governments in Westminster have supported such generous pay outs. And the reason for this is that MPs themselves also have an astonishing pension scheme, with perks currently around £40,000 on top of their annual salary. This was highlighted last month when it emerged that the Labour Party is planning to increase tax on private pensions to pay for public sector contributions.

The bloated system persists because taxpayers are forced by law to pay for it, rewarding those who work in the system with remarkable pension schemes, which give them an incentive to be loyal for life. This is a forgotten force that consolidates the power of the centralised state. It is clear that liberalism cannot win in a fair fight, as polls consistently show its unpopularity. Yet for it to be banished, the people—both culturally and financially—need to be unchained. And for that to happen the public need more time, disposable income, and choice—because new political parties, organisations, and narratives can only occur among intelligent, aspirational people. 

Even a modest drop in tax would likely leave the middle class a lot better off and would stimulate productivity in all areas of society. Javier Milei’s ability to turn Argentina’s economy around in a matter of months is proof that decades are not needed to accomplish this—only the will to do it. For the first time since 2012, his country now has a budget surplus and achieved higher tax revenues amidst a deregulation campaign. Such positive news is a sign that those arguing for a smaller and more efficient state have the right outlook, and similar policies could be enacted in Europe. One of the key tasks is to move away from the idea that high public spending should be the norm, because it wasn’t until comparatively recently.

For example, many might be surprised to learn that income tax was only introduced in 1798, and the higher rate only reached 10%. And even as late as 1894, inheritance tax on estates over £1 million was set at just 8%, compared to the current 40% for assets worth over £325,000 today. This is a big reason for Britain’s decline in prosperity, as the wealth accumulated in a lifetime is hoovered up by the state, instead of passing to the next generation who desperately need it. As a result, young adults are forced to start from scratch and regrow their family’s assets, only for their offspring to find themselves caught in the same trap when they die. There are of course legal loopholes but the options are limited and the narrative is clear: the state deems itself entitled to take your private assets.

A British citizen may complain about the liberal narrative of his country, yet for his entire working life and beyond he will pay for it. The irony of funding the elites who contradict your worldview is not lost on everybody, and, as noted, the success of Javier Milei in Argentina demonstrates that it can be reversed. Yet it will take a truly radical government—perhaps one even more hawkish than the Thatcher Ministry of 1983-87—to change Westminster for good. Until that time, the state continues to strangle your life choices and freedom, and you’re paying for the ‘privilege’ of them doing that.

I started this piece by highlighting the unelected and unaccountable nature of Britain’s political system, but the important point is that this unaccountable system operates in such a way as to excessively snatch ordinary people’s money. The greatest example of this was the recent appointment of David Cameron as Foreign Secretary, a man who lost a national referendum as prime minister and told people struggling with heating bills to put on jumpers. Yet he revealed the depth of his entitled attitude by his decision to force British taxpayers, by law, to pay 0.7% of government spending on foreign aid. And then, when a later government tried to lower this threshold during the COVID recession, his allies went to court in a (failed) attempt to block it. This exemplifies the liberal waste of working people’s money, the strange priorities of the political class, and the great gulf between them and the wider population that they are meant to serve.