An analysis of the effects of taxes

• The sharp growth in the net dependency ratio in 2020/21 can be attributed to measures taken in response to the Covid-19 pandemic, in particular the impact of indirect taxes and benefits in kind. [...] • The redistributive nature of the tax and benefit system is more pronounced for non- retired households: - In 2020/21, individuals in the top quintile (5th) of non-retired households (as measured by equivalised household income) paid an average of £41,087 more in taxes than they received in benefits. [...] • On the other hand, individuals in retired households receive more from the tax and benefit system than they pay in taxes: - In 2020/21, individuals in the top quintile of retired households (as measured by equivalised household income) received, on average, £5,578 more in benefits than they paid in taxes. [...] The long-term trend in the net dependency ratio is clearly upwards: the 2020/21 figure of 54.2 per cent is significantly above the 1977-2000 average of 41.2 per cent. [...] Indirect taxes form a larger share of the disposable income of the bottom quintiles (57 per cent for the bottom and 43 for the second, in 2020/21) than they are for the top quintiles (30 per cent for the fourth and 17 per cent for the top, in 2020/21).