How the UK government uses Taxation to tackle social and economic inequalities: The British government raises public money partly via taxation and National Insurance (NI – pays for the NHS, state pensions & unemployment benefits). We pay income tax and NI on our earnings, VAT on the non-essential goods and services that we pay for, council tax on the property we live in, as well as other taxes e.g. stamp duty (when purchasing property). In the UK, we have a progressive tax system, meaning the wealthier pay a larger proportion of their incomes in tax. E.g. earnings up to £50,000 incur 20% income tax (excluding the first £12,500 which is tax free), but earnings between £50,001 and £150,000 are taxed at 45%. Although we pay VAT on most goods and services, essential food is exempt, which benefits poorer groups who spend a larger % of their income on food.