John Gustavsson: Why Britain should issue taxpayer receipts

John Gustavsson holds a PhD in Economics and is a former advisor to the Sweden Democrats in the European Parliament.

The Conservative Party recently has taken to attacking both Sir Keir Starmer and Nigel Farage for fiscal irresponsibility, both over uncosted promises and for being a threat to public finances. The troubling reality is that most Brits remain unaware of how their tax money is spent, leaving them vulnerable to poorly costed political promises.

The current lack of transparency leaves voters ill-equipped to judge their would-be leaders’ fiscal plans; this is a problem that could be solved by issuing taxpayer receipts.

Whenever cuts are made anywhere, some voters will argue that, surely, there are other areas that could be cut – areas that wouldn’t affect them personally. As things stand, the debate over government spending suffers from voters’ misconceptions over how their tax money is used.

While recent data is sparse, a 2014 YouGov survey found that British voters believed expenditure on welfare was half of what it actually is as a share of total expenditure. A 2021 More in Common poll further found that the public is woefully unaware of how much is spent on pensions, and apparently believe that MPs earn salaries that would make top level athletes jealous.

As tempting as it may be, these misunderstandings are not to be laughed at. A voter who sincerely believes that MPs’ salaries account for one twelfth of all spending is not going to be receptive to arguments about how they should accept lower benefits or higher taxes, as they sincerely believe the budget would be balanced if the politicians themselves would agree to take a pay cut.

That voters on average believe that spending on pensions and benefits is about 60 per cent lower as a share of overall spending than it really is may, in part, explain why so many voters support the triple-lock and oppose means-testing benefits.

These findings are broadly in line with those of a 2024 American study by the Bipartisan Policy Center, which indicated that US voters underestimated the cost of social security and Medicare, while overestimating smaller budget areas like foreign aid.

It is easy to understand why voters struggle. Fiscal debates revolve around numbers that they hardly, if ever, use in real life. As humans, these kinds of numbers are hard to conceptualise: a voter may be aware that state pensions amount to £124 billion a year, but how would they determine whether that is a lot? To the average taxpayer, numbers like those are simply too big to grapple with.

Fortunately, there is a solution to this problem: issuing an individualised tax receipt to each British taxpayer.

This receipt would detail how much the taxpayer has contributed towards different budgets, annually and monthly.

The median full-time worker pays around £600 per month in taxes (including NI but excluding local taxes). Since the NHS accounts for just over 20.5 per cent of spending, the receipt would inform the median taxpayer that they contributed £600 x 0.205 = £123 per month to the NHS, or £123 x 12 = £1476 over the course of a year.

State pensions, in turn, amount to just over 10 per cent of spending. The receipt would show that this hypothetical taxpayer contributed £600 x 0.101 = £61 per month towards state pensions, a similar £64 to education, £32 to defence, £9 to fund policing, £6 to foreign aid, and let’s not forget the sizeable £53 monthly contribution to pay interest on outstanding government debt.

Of course, not everyone pays the same in taxes every year, which is why the receipt would have to be individualised. The more itemised the receipt, the better. Receipts should be available online in addition to on paper (“taxreceipt.gov.uk” anyone?) and allow taxpayers to share parts or their entire receipt on social media, something that would no doubt spur debate (“Can you believe I paid £100 in taxes last year towards this?”)

Ideally, local councils would also issue their own receipts.

By helping voters understand government spending, the receipt would clear up misunderstandings and improve the public debate around economic policy. Some may look at their receipt and be surprised at how much they are paying towards, for example, disability benefits, whereas others may be surprised to find out they are not paying more. In any case, the debate will finally be based on facts. Politicians, confronted by angry voters who ask why they are not just cutting X instead of Y, would be able to show that hardly any money goes to X, whereas a lot goes to Y.

Breaking down numbers like this also helps provide a useful framework for voters to determine what is and is not worth it. The £32 that the hypothetical taxpayer in the example above pays towards defence every month is similar to the cost of broadband, or a gym membership. Is having a military able to defend Britain worth at least as much as access to a place to work out? I would hope most voters’ answer would be “Yes”.

Ideally, the receipt would also include a column showing how spending has changed from one year to the next. If, as a taxpayer, you realise that you are now contributing more to certain government services even though your income has stayed the same, this may cause you to question whether the quality of those services has also increased proportionally, or whether your money is being wasted.

Taxpayer receipts would make it harder for politicians of all stripes to make uncosted, unrealistic promises. If a politician promises to double spending on one area by defunding another, a voter could with the help of their taxpayer receipt find out whether this is feasible, or whether the area being defunded is much cheaper than the one being doubled.

No party that doesn’t fear being held accountable for how it spends taxpayer money ought to be opposed to issuing taxpayer receipts. Yet, no party would benefit more from championing this idea than the Tories, who, over the course of 14 years in government, developed a reputation for lack of transparency, a reputation it must shed if voters are to give the party a second look. Since calculating the information needed for the taxpayer receipt is so simple, a moderately tech-savvy employee of the CCHQ (or a conservative think tank) could even create and market a form on its own website and social media that would allow users to input their income, after which they receive their (shareable) receipts.

In conclusion, taxpayer receipts offer a practical solution to a long-standing problem: the disconnect between voters and the realities of government spending. By delivering clear, personalised insights into how taxes are used, these receipts would empower British voters to engage meaningfully in fiscal debates. To convince voters that it is serious about renewal, the Tories ought to take every chance to champion transparency initiatives like this one. One can only hope they will seize the opportunity.