This’ll Tax Your Brains!. The Welfare State This was created in 1948, after WW2, when the UK had significant social and economic problems to solve. The.

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Presentation transcript:

This’ll Tax Your Brains!

The Welfare State This was created in 1948, after WW2, when the UK had significant social and economic problems to solve. The Beveridge Report of 1942 identified five ‘giants’ standing in the way of social progress in the UK…..

WANT DISEASE IGNORANCE IDLENESS (Poverty) (Poor housing) (Lack of education) (Ill health) (Unemployment) Squalor

Cradle to Grave Today the government still has the main responsibility for providing a means to help poorer people, via the welfare state. It’s slogan was to help people from the cradle to the grave ie. from birth ‘til death.

The Government Revenue Spending Services Benefits Taxation If a government wants to ‘move money’ to help poorer groups it can do this by changing tax or changing spending.

Taxation There are lots of different types of tax 1. Income Tax – paid by earners 2. Corporation Tax – paid by companies on their profits. 3. Inheritance Tax – paid on wealth passed on after death. 4. VAT – paid on goods and services bought.

Progressive or Regressive? Progressive Taxes are ones where the more you earn the more you pay. Income tax (direct tax) is progressive. Basic rate 20% - for first £35,000 Higher Rate 40%- £35,000 - £150,000 Additional Rate 50% - £150,000+

Regressive Taxes mean the amount paid in tax is proportionally more if you earn less. VAT (indirect tax) – everyone pays the same amount of tax on each product so the proportion paid by poorer people is higher. Currently those in the lowest 20% income bracket give 30% of their incomes in VAT, whereas the top 20% of earners only give 10%

Government Spending Alternatively, to reduce wealth inequalities the government can target it’s spending on poorer groups. Spending on benefits is a key way to redirect money towards those most in need.

Department of Work and Pensions The DWP has responsibility for benefits in the UK. The system is very complex and a large number of different people qualify for a large range of different benefits. Currently, it is under review with a view to simplifying the system down to one single payment for those in need.

Get the balance right One significant problem is getting a balance between helping those in need, whilst avoiding creating a ‘dependency culture’.

Current Recession! Unemployment Static pay Little buying and selling (demand) Little bank lending Government cuts in spending High prices for food and fuel

Effects! The recession is an excellent thing to quote in essays or reports as it especially effects poorer groups. Today measures have been announced to help poorer groups with fuel costs.

Currently we have a huge national debt of £7 trillion!! Why is this such a difficult thing for the Government to solve? Think up some solutions……..