Is their tax bill the single biggest cost of living for most households in the UK?

Question

Mark Littlewood wrote an opinion article in The Telegraph [unpaywalled alternative] atacking the UK's Conservative Party.

He claimed:

For most households, the single biggest cost of living is their tax bill.

This does not seem credible to me, from either personal experience or a back of the envelope calculation:

• Median UK post-tax income for households, 2021 = £31,400
  • Other estimates are similar, though for individuals rather than households:
  • 2021 median average salary for an individual in the UK = £25,971
  • 2021 Median employee earnings for an individual full-time employees = £611/week = £31,859/year
• Tax on single person earning £31,400 = £3,766.00 income tax and £2,584.08 National Insurance, total = £6,350.08
• Average UK Rent = £1,091 per calendar month, £13,082 per year

There are some inaccuracies here, including that only 37% of people do not own their own home, and if there are 2 wage earners in a household they will pay less tax, but this difference seems to be not credible to me. Could it be true?

Answer 1

We can review 'effects of taxes and benefits on household income'

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/theeffectsoftaxesandbenefitsonhouseholdincomefinancialyearending2014

According to this the middle quintile had an income of £39,585, and received £6,514 of government benefits (largest being pension, at £2,706). Meanwhile they paid £7,825 in employment taxes including student loan (£83 so barely relevant), and paid indirect taxes (alcohol, VAT), of £5,737 and intermediate (commercial rates, VED, employers NI) of £1,606 = £7,342 total.

If we consider the middle quintile then total household spending on housing (the largest item) is only around £125/week (includes insurance, rent, mortgage interest and repayment moving costs, maintenance and improvements but not electricity, water, council tax): https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/datasets/familyspendingworkbook5expenditureonhousing

Therefore taxation is overwhelmingly the largest bill for even the middle quintile (which includes 40th to 60th percentile), totalling £15,167, vs. housing spending of only around £6,500.

For higher quintiles this will become increasingly true.

We can note that the middle quintile gets more out than it puts in, in the form of education services, NHS, etc., and we can also note that there is not really a 'tax bill' per se, but taxes on as many things as possible designed to raise the very large amounts of money spent by a modern Western government. It should really be obvious that with taxation at 38% of GDP, that taxation is going to be larger than say housing.

The obvious rebuttal to this of course is that since the middle quintile is getting around £3000 more in direct and indirect benefits than it is putting in that this 'tax bill' (which doesn't exist per se) represents payments for services that one would otherwise have to buy. In this case of course a household with two children would have high education spending, whereas a childless couple might have zero. In comparison, the US has much lower taxation as a proportion of GDP but one of the most expensive healthcare systems in the world (https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?most_recent_value_desc=true&view=map), so it is probably not fair to simply say 'tax bill', in that these represent actual useful services being funded, that people would otherwise have to purchase