What's in store for us at the budget 2012 | Conservative Budget -
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What's in store for us at the budget

The plan is that every tax payer will receive an annual statement telling them where the money they have paid in to the Revenue has gone.

This will be announced by George Osborne at the budget, the idea is that every worker has the right to know where their taxes are being spent.

The results are likely to prove startling in some cases.

For people on higher-rate taxpaying earning £50,000 this year they would be told that they are paying £14,183 in tax and National insurance - they would then be told that approximately one third of this is spent on welfare, around £4,727.67.

On the same wage, £2,469.68 is spent on health, on education £1,848.7, on defence £818.52 and on public order and safety £705.62. Foreign aid is given a £141.12 and the EU is handed £70.56.

A source from the Treasury said: 'It's quite right that people know how much tax they pay and what it's spent on.'

By revealing exactly how the 29million British tax payers money is spent the Chancellor hopes it will change attitude towards Government spending.

There is also the hope from the Conservatives that if the public are aware of how their taxes are used they will be more inclined to vote for a party that promises to lower taxes.

They also believe that the taxpayer should be aware that they contribute 31p as base rate once national insurance is included, not 20p as most believe.

It is also thought the Chancellor is considering even more radical reform, by merging income tax and national insurance together. This would save businesses billions in administration cost.

David Gauke the treasury Minister said: 'For a lot of people, the tax line on their pay slip is the only time they see just how much they're paying in tax, but the Government doesn't think that's good enough.

'We want to make tax more transparent and we want people to be more engaged with their own tax affairs. We plan to lift the lid on tax so that people understand how much they are paying, what their overall tax rate is and what they should be paying.'

Ben Gummer Conservative MP, who has championed the idea of personal statements, said: 'Few of us would part with more than a few pence without a record of how it was spent. From supermarket receipts to electricity bills, we expect an itemised breakdown of where our money goes.

'Yet for our largest monthly payment, to the taxman, we get just two numbers printed on a pay slip. We are not told the overall value of our taxation obligation.

'We are not told what proportion of our income it represents. Crucially, we are not told how the Government spends the money we are made to give it. This must change.

'Just as we are under an obligation to pay tax, the Government should be obliged to tell us how it spends our money.

'It is a simple idea that could change the way we do politics. For the first time people will get a real feel for the relative distribution of their taxes.

'By providing voters with this crucial information, the Government will make it's spending comprehensible in simple and personal terms. These single sheets of paper have the potential to transform and enliven our democracy.

'Tax statements could be implemented quickly and cheaply. They help the Government merge income tax and National Insurance and do more than anything else to help it achieve transparency in the tax system.'

In the budget the Chancellor will announce the changes from 2014/2015.

The cost of administrating the new system is expected to be around £800,000.

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