Most people think that they
are paying too much tax. In this section we want to explain what your
tax money is used for.
Taxes are spent on many different things. They
are for public spending.
Public spending means spending on public property - on institutions
and services that are not privately owned.
So the taxes you pay are used to pay for
transport, education, health, law and order, housing, culture/media/sport,
trade and industry, environment/food/rural, overseas development
and defence.
When the government increases taxes it is
because it needs more money to finance these services. Sometimes
tax needs to be increased to help deal with economic problems.
In 2002, the government decided to raise
taxes to improve public services such as education and health.
This means that more money is taken from your salary – but
at the same time you can benefit from better public services.
Local taxes Local services are paid for in three ways.
Local services include many different things.
Which of the following do you think are provided by your local
council.
This is an impressive list of services.
The amount of money which is spent on them varies with schools
and education usually representing the larger part of the budget.
This pie chart illustrates an example breakdown of expenditure
on local services.
Many local authorities provided detailed
breakdowns of their expenditure for local people. This is usually
included with your Council Tax bill in the form of a pamphlet.
Business
Rates Council Tax is the local tax which pays for local services
but another important contributor is Business Rates. Their full
title is Non-Domestic Rates. You have to pay Business Rates if
you occupy a shop, office, workshop or other business site. However,
you still have to a pay a reduced amount even if the building
is empty.
In some cases you may be using your home
to run a business or living over the business (e.g. a flat over
a shop). In these cases you may have to pay both Council Tax and
Business Rates. How you are using your home for the business is
an important element in deciding if you need to pay Business Rates.
You can find details about Business Rates on the Department
for Transport, Local Government and the Regions web site.
Government
Grants Although Council Tax and Business Rates make a large
contribution to paying for local services they are insufficient
to pay for the all the services. The extra money comes directly
from government and is calculated using a complex formula.
