British households are far less able to deal with the credit crunch because taxes have risen by the equivalent of £6,520 per household compared to 1996/97 levels. This ratcheting up of the tax burden has been a steady feature of the Brown years but it is being felt with particular force now.
During the boom years, homeowners felt richer as their house price rose at the fastest rate in the OCED and borrowed massively. So now, when the debt tap is choking, millions of households are right up against it because of this higher tax take.
A tax cut is, of course, how to help people facing soaring food and fuel bills. But Brown has spent the money, and the bank bailouts mean even further tax rises. The above graph shows inflation-adjusted tax revenue divided by the number of households.
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