People and economists alike often look at the state of the British economy and lament that our tax burden, national debt and public spending are all far too high. As rumours swirl about an IMF bailout of the British economy, people should cast their minds back to the economy of the 1960s, before Britain required IMF support.
In 1966, George Harrison wrote a song titled “Taxman” as a protest about Harold Wilson’s crippling tax on high incomes. At the time, the top rate of income tax stood at 83 per cent on earned income, with a 15 per cent surcharge on investment income, pushing the effective rate to 98 per cent. The Beatles realised early into Harold Wilson’s first term as Prime Minister that with such high taxes, even one of the world’s most successful bands could be facing bankruptcy if things continued. This “super-tax” left many high earners dismayed and considering moving abroad to escape the burden.
Naturally, generous welfare provision, pensions, and in-work benefits cannot continue forever
In 2025, many individuals find themselves in the same situation. The overall British tax burden is the highest it has been since the Second World War and is expected to rise in the upcoming Autumn Budget. As a result of this, Britain is projected to lose around 16,500 millionaires in 2025 — the largest number globally — which will only drive taxes higher for those who remain, either by choice or by circumstance. Meanwhile, the average Brit is weighed down by high taxes and a soaring cost of living, while receiving poor public services in return.
As Labour keeps borrowing to fund its large-scale projects, how much longer can it go on like this?
Naturally, generous welfare provision, pensions, and in-work benefits cannot continue forever. Nigel Farage’s “nothing works anymore” rhetoric may sound simple, but it is just one reason why Reform UK finds itself so far ahead in the polls. Governments of the future cannot prolong this struggle of overtaxation simply to protect their previous reputations. Instead, politicians must level with the public: for too long, the government has tried to do too much. If people were more self-sufficient, the size of the government could shrink and the tax burden could return to more sustainable levels.
It would be disingenuous to suggest that the millionaires leaving Britain are doing so out of a dislike for the country. Many wealthy people, such as Charlie Mullins, the eccentric owner of Pimlico Plumbers, have an interest in Britain prospering but have been driven out by the rising cost of staying. To attract such people back, many of whom would not mind paying moderate levels of tax, the UK must cut the overall tax burden and make it easier to live and do business here.
Through their anti-tax anthem, the Beatles criticised Harold Wilson’s approach to taxing almost every aspect of life. While heavy then, people today face far more taxes than the band could ever have predicted. For example, a nurse earning £35,000 will pay the basic rate of 20 per cent income tax plus national insurance contributions before even receiving take-home pay. On top of this comes 20 per cent VAT on most goods, as well as excise duties on items such as petrol, alcohol and cigarettes. Households also face council tax and, if they can afford to buy a home, stamp duty, alongside green levies and 5 per cent VAT on already inflated domestic energy bills. Even in death, if they have saved enough through their (taxed) investments, dividends and interest on savings, they will be taxed 40 per cent of anything above the inheritance threshold.
If this sounds like a lot of hard work only to be taxed at every turn, that is because it is. Today, the middle class appears to be taxed just as relentlessly as high earners were in the 1960s. With so much income going to the state, there are limited incentives to work harder, save, or invest. Ultimately, some economists have suggested that the current crisis could end the same way as in the 1970s — with an IMF bailout.
While previously, the Wilson Labour government framed such high taxes as redistributive and to pay down our war debt, taxes by today’s Labour seem to be spent only on Britain’s ballooning budget deficit. The last time the UK ran a budget surplus was in the 2000/2001 tax year, suggesting that we have lived with excessive public spending for too long. With civil disobedience and protests flaring up over immigration-related issues and a broader sense of unfairness, the sentiment of the 1960s feels more alive than ever.
Ultimately, the only way to avoid another IMF crisis is through fiscal restraint. Money has not been invested prudently in British public services, leaving us with a costly NHS, wasteful quangos and powerful unions. Right now Britain needs a major reduction in the size of the state. Supply-side policies may help secure our future once the economy is on a sturdier footing, but in the immediate term we need a leaner state and a falling tax burden.
