Britain narrows gap between rich and poor

LONDON, May 12 (Reuters) Britain is closing the gap between its richest and poorest citizens, but the average income of the most affluent is still 16 times that of the least well-off, official data showed on Friday.

The Office for National Statistics said that before tax and benefits, the average income of the wealthiest 20 percent of Britons was 66,300 pounds in 2004/05, while that of the poorest 20 percent was just 4,300 pounds.

That is an improvement from 1987, when comparable records began, when the average income of the wealthiest Britons was 21 times that of the poorest. The disparity reached a peak of 24 in 1988 that was matched in 1991.

That ratio decreases dramatically once taxes are deducted and state benefits are added on, with the incomes of the wealthiest worth just four times that of the poorest.

However, that figure has been broadly steady since 1987.

The ONS said that cash benefits such as income support, child benefit, incapacity benefit and state pension payments accounted for 60 percent of gross income of the poorest Britons and just two percent of the incomes of the nation's richest.

And while the wealthiest Britons paid a quarter of their gross incomes in direct taxes, the poorest paid just 10 percent.

However, the poorest were hardest hit by indirect taxes -- which include those tax on cigarettes, alcohol and betting as well as Value Added Tax.

These levies took a 27 percent chunk out of the incomes of the poorest Britons, compared with just 11 percent from the richest.

REUTERS MP RS2057