Belfast Telegraph

Thursday 18 December 2014

Northern Ireland pays less tax than rest of UK... because we're poorer

Each person in Northern Ireland pays 23% less tax than the UK average
Each person in Northern Ireland pays 23% less tax than the UK average

New figures from Her Majesty's Revenue and Customs (HMRC) show each person in Northern Ireland pays 23% less tax than the UK average – but spends more on fuel and tobacco.

While often considered the only certainty in life aside from death, the average person here is hit with a tax bill of £5,700 compared to £7,100 in Scotland, £7,500 in England and £7,300 for the UK as a whole.

Only in Wales is the tax bill lower at £5,400.

That differential, according to thinktank the Institute for Fiscal Studies (IFFDS), is a direct reflection of lower levels of income.

"Wales and Northern Ireland have less income and wealth than the rest of the UK and correspondingly raise less revenue per person from all the main taxes on earnings, savings and profits: income tax, National Insurance contributions (NICs), corporation tax, capital gains tax, inheritance tax and stamp duties all yield at least 25% less revenue per person in both Wales and Northern Ireland than in the UK as a whole," it said.

While our earnings may be lower than the UK average, it appears we are well able to spend money on tobacco products, fuel and goods subject to value added tax (VAT).

VAT revenues in Northern Ireland are only slightly below the UK average, and we provide 18% (£76) more in fuel duty revenue per person each year than the UK average.

But when it comes to tobacco, the differential balloons.

On average, each person in Northern Ireland pays £120 more each year in revenues on tobacco than the average person in the UK, a staggering 79% premium.

This is the first time HMRC has broken the tax revenue down by region, and away from the detail the headline figures gives the greatest cause for concern, according to the IFFDS.

This is also the first time that most sources of revenue have been broken down to show the amount raised in Wales and Northern Ireland separately and what is particularly striking about these estimates is how much lower taxes per person in these areas are than in England and Scotland.

The taxes reported by HMRC cover 80% of total revenue, and don't include revenue not collected by HMRC, such as council tax, business rates and vehicle excise duty.

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