In almost all countries, taxes are collected to fund public services (public expenditure) and pay off national debt.
According to the UK government's tax year 2022-2023 figures, every £1 of tax collected was used as follows:
- 19.80p funded the Health Service. UK residents generally receive free healthcare at GPs and NHS public hospitals.
- 19.60p funded Welfare, including Housing Benefit, Unemployment Benefit, and other social security payments.
- 12.00p was used to pay the interest on National Debt.
- 10.30p was spent on the State Pension, a government payment you receive upon reaching the state-determined retirement age. For those born after April 6, 1978, this age is currently 68, though it can change based on birth year and evolving legislation.
- 9.90p funded Education. In the UK, all children aged 5 to 16 have the right to free education at state schools.
The remainder was allocated to:
- Defence
- Public Order & Safety
- Transport
- Government Administration
- Housing and utilities
- Environment
- Outstanding payments to the European Union (formerly known as 'UK contributions to the EU budget', this refers to payments agreed upon after the Brexit withdrawal).
- Overseas Aid
Simply put, in the UK, residents are obligated to pay taxes according to regulations, but in return, they benefit from free healthcare, free education for their children, regular waste collection, clean streets, good air quality, guaranteed public safety, and a range of other advantages.
While the role of HMRC (Her Majesty's Revenue and Customs) is to ensure everyone pays their taxes and complies with tax laws, HMRC also provides guidance on legal ways to minimize tax obligations. HMRC encourages taxpayers to utilize efficient tax schemes such as ISAs (Individual Savings Accounts), Marriage Allowance, and Rent-a-room relief.
It begs the question: would people prefer to pay taxes for better public services, or pay less tax and be fully responsible for all expenses, big or small? Or perhaps somewhere in between?