The Workers Party of Britain advocates an increase in the personal tax threshold for the poorest-paid working people.
Any loss for the exchequer can be easily made up with measures taken to counter tax evasion by big business, or by a tax on those with fortunes exceeding £10m.
Already before the economic crisis of 2020, there were 5.19 million people earning poverty pay – that is, pay below the living wage.
Our policy would help almost all working people by removing tax from the first £21,200 of their wages, which would be a lifeline to more than two million workers who earn between £12,500 and £21,200 and who currently pay 20% tax.
Leader, Workers Party of Britain
The ‘living wage’ is set by the Living Wage Organisation at £9.30 nationally and £10.75 in London. [i]
According to Katherine Chapman, director of the Living Wage Foundation: “about six million people earn less than the real living wage”. [ii]
The Workers Party of Britain believes that a person earning less than the living wage should not be asked to pay personal income tax and that the living wage shown below should now be the personal threshold at which income tax liability begins.
In the interest of equality and of keeping calculations straightforward, an hourly earnings rate of £10.75 has been applied nationally. [iii]
|Annual salary||Tax deducted per year at existing threshold (£12,500)||Tax deducted per year at proposed threshold (£21,000)||Additional take-home pay per year [iv]|
1. In 2019, KPMG reported: “The number of jobs paid less than the real living wage now stands at an estimated 5.19 million.” [v]
2. According to the Office for National Statistics (ONS), in 2016, before the present crisis began, approximately 9% (2.9 million) of all jobs paid £7 per hour (c £13,800 per year). This figure is considered to represent those currently earning under the £12,500 personal tax allowance threshold. [vi]
4. Of the 32.81 million people in employment in the UK, there are 2.9 million (9%) who earn below the £12,500 tax threshold and therefore pay no income tax. Given that there are 5.19 million who earn below the real living wage (£21,200), we can conclude that there are 2.29 million who earn between £12,500 and £21,200 (5.19m – 2.9m). The WPB’s proposed rise in the personal allowance tax threshold (PATT) would unfortunately not do anything to help those who currently earn below the existing personal allowance threshold (at least, not until the living wage is legally enforced).
[ii] Record number of UK workers paid below minimum wage – report by Mattha Busby, The Guardian, 26 April 2019.
[iii] WPB is aware that other taxes and contributions are paid by and already form a disproportionate burden upon the individual worker.
[iv] Anyone earning over £21,000 a year will also be £1,700 better off (those earning over £125,000 per annum loses their personal allowance). Note that no consideration is given to National Insurance payments in these figures.
[v] Jobs paying less than real Living Wage drops to seven-year low, KPMG, 4 November 2019.