LONDON, April 25 (Xinhua) — The average annual income of the richest fifth of households in Britain before taxes and benefits reached 84,700 pounds (108,500 U.S. dollars) in 2016, the Office for National Statistics (ONS) said Tuesday.
The total was 12 times greater than the annual income of the poorest fifth, which was 7,200 pounds (9,223 U.S. dollars) in 2016, added ONS.
“This was mainly due to an increase in the average income from employment for the poorest fifth, reflecting increases in both the wages and employment of people living in those households,” said ONS.
On average, British households paid 7,800 pounds (9,992 U.S. dollars) in direct taxes, such as Income Tax, National Insurance contributions and Council Tax, in 2016, equivalent to 18.7 percent of their gross income. Richer households paid a higher proportion of their income in direct taxes than poorer households.
ONS said the poorest households paid more of their disposable income in indirect taxes, such as Value Added Tax (VAT), and duties on alcohol and fuel than the richest households. For the poorer homes this represented 27.0 percent of their disposable income, compared with 14.4 percent spent by richer families.
This, added ONS, showed that indirect taxes cause an increase in income inequality.
According to ONS, households where the main earner is aged between 25 and 64 paid more in direct and indirect taxes than they received in benefits, while the reverse was true for those aged 65 and over.