The Peoples' Budget? - PricewaterhouseCoopers Survey Taxpayers

Findings suggest that raising further the tax on cigarettes with the extra money going to the NHS and introducing a city centre toll for motorists would be widely supported by the working population. And a simple increase in the personal tax allowance (the amount you earn before you pay tax), would be the most popular way to reduce income tax.

The survey, carried out in association with MORI, asked 877 working people across the UK for their views on possible tax changes in the Budget. Respondents were asked about their preferences on income tax cuts, increases to cigarette duties, taxing motorists and Inheritance tax.

Commenting on the results, PricewaterhouseCoopers tax partner John Whiting said:

• "The survey results point to clear preferences among people for how they should be taxed. The Government could do worse than listen to these views especially in the run up to an election. Unsurprisingly, people care about how they are taxed".

Car Tax

Car taxation is a thorny subject for the Chancellor with fuel duty rises particularly sensitive. However, when asked how they would raise more taxes from motorists, a large percentage favoured a congestion charge on city centre (45%) and road usage (33%). This compared with only 7% favouring an increase in the cost of road tax and only 9% favouring a further increase in the duty on petrol.

John Whiting, explained:

• "This suggests increasing the traditional taxes on the motorist, such as petrol duty or the cost of the tax disc, is a no-go area for the Chancellor with less than 10% of respondents favouring tax hikes in these areas. The interesting point is people's willingness, whether car owners or not, to support charges for city centre usage or congestion charging - something that politicians seem to shy away from."

Tobacco Duty

The PricewaterhouseCoopers/MORI survey shows huge support for further duty rises on cigarettes, with 72% of those surveyed agreeing with an increase in duties with the extra money going to help fund the NHS. This is in contrast to the view that tobacco duties are already too high and further rises would simply increase tobacco smuggling rather than revenues.

John Whiting added:

• "With 72% of people surveyed agreeing that taxes on cigarettes should be increased to help fund the NHS, the Chancellor seems to have a mandate for further tobacco duty rises. The challenge is to convert the extra tax to visible improvements in the NHS".

Income Tax

Budget predictions have widely tipped a cut in income tax this year. However, there are a number of options open to the Chancellor aside from reducing the basic income tax rate. According to the PricewaterhouseCoopers survey, 45% of respondents preferred an increase to the amount they can earn before paying tax, compared to only 7% who wanted to increase the 10% band.

John Whiting noted:

• "It is telling that most people would prefer a simple increase in personal allowances to take more taxpayers out of the tax net and not the rise in the 10% band that is widely expected to be the Chancellor's choice".

Findings also showed that 25% of respondents favoured a reduction in the current basic rate of income tax from 22% to 21%. 14% of respondents preferred an increase in the higher tax rate threshold, currently £32,785, with over two thirds of these, unsurprisingly, coming from the higher earning ABC1 demographic classifications.

Technical details

• MORI interviewed a representative quota sample of 877 workers across 185 sampling points in Great Britain. Interviews were conducted face-to-face, in-home, between 8 and 13 February 2001 on the MORI Financial Services Omnibus. Data have been weighted to reflect the national profile.
• Attitudes of British Workers on Tax Issues - Summary of key findings

  Options for reducing income tax

  The largest proportion (45%) stated a preference for increasing non-taxable allowance. This was preferred over a lowering of the basic rate of tax or increasing lower and higher tax rate thresholds. Less than one in ten stated their preferred option as an increased threshold for the 10% lower tax rate.

  Raising money from drivers and car owners

  The preferred mechanism for raising money from drivers and car owners is City Centre Usage (e.g. an entrance charge), followed by road usage (e.g. congestion charges) and car parking. This is reflected across all social groupings, across age group and geographic location.

  NB. Even car owners are substantially in favour of a City Centre or road usage charge.

  

  NB: Respondents were able to choose more than one option

  Inheritance Tax (on assets over £240,000)

  Opinion is polarised. Paradoxically it is the over-45s and professionals (those in the AB demographic classification) who are most likely to support inheritance tax at this level. The under-24s, manual workers, non-car owners and single people - those with less material wealth were less likely to agree with inheritance tax.

  Tax on Cigarettes

  The British public is very definitely pro-tax on smoking. 72% either tend to agree or strongly agree with an increase in tax on cigarettes to be spent on the NHS.

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