Forget child benefit what we need is a simpler tax system
The furore over abolishing child benefit for higher rate taxpayers shows how difficult it is to make changes to the benefits and taxation system.
The government has chosen the ã44,000 individual limit to cap child benefit because it is simple and easy to manage. Go into the higher rate tax band and you will no longer be eligible for child benefit.
It is however manifestly unfair that a couple jointly earning ã80,000 would still be eligible for the benefit because neither has an income in excess of ã44,000, especially when the objective of this exercise is that coalition buzzword - fairness.
I've long held the view that our taxation and tax credits system is much too complicated. And because it is complicated it needs and army of bureaucrats to administer.
The coalition is finding that tinkering with the benefits and tax system is very difficult.
What is needed is radical reform and a simplified tax system.
As part of a simplified tax system benefits like tax credits and child benefit should be scrapped and instead a series of tax discounts should be introduced. So for instance instead of giving child benefit why not give a tax discount per child on a sliding scale so that those earning the most get nothing, while giving more of a discount to the poor.
A similar system could be applied to winter fuel allowance.
National insurance should also be abolished and merged into income tax. It has suited governments of all colours to pretend that raising NI was not a tax rise, but it always was. A fair system should also be an honest system.
It would also make sense to give couples (not just married couples as the coalition wants to) the choice to pool their incomes for taxation purposes.
When everyone is told that they will need to make sacrifices it makes sense to introduce sweeping reforms to the tax system that might not be politically possible at another time.
9 Comments
Leave a comment
Dale Street Associates
David Bartlett
City editor of the Post and Echo covering politics, regeneration, and urban affairs.
Read My Posts »
If you give tax discounts for these purposes, what about the poorest people in society who do not pay tax? I presume you are not proposing cutting child benefit for people who do not pay tax, or pay very little tax - if not then you would need 2 ways of paying this, one through a discount in tax for those who pay enough tax for it to be relevant, one for those who do not. Much simpler!
David, it is unusual for a journalist to suggest his own policy solutions, interesting.
Let me have a look at your idea. I worry that though superficially it looks reasonable, it would lead to the systematic dismantling of the welfare state as we would be asking rich people to make a bigger contribution and yet receive nothing in return - at all. This would eventually rankle with them so much that support for the concept of a welfare state would fracture and it would be lost.
"I pay all this money into the system and I get nothing out of it, so why am I still doing it?" would be a dangerous line for the rich of our country to begin to follow. They are much more representative amongst decision makers, than those at the other end of the wealth spectrum. We need their continued buy in to the welfare state/safety net.
Secondly the whole point of universal benefits is that they are considered to be of such value and importance that everyone should receive them. And this is not just because it is fair or easy to administer if everyone receives it, but because it is something worthwhile and desirable. We value every single one of our children and wish to make a contribution each week towards their upkeep. If some families dont "need" the money but choose to put it towards leisure activities for their kids, then so be it. If some pensioners dont need the ã200 winter fuel allowance in November to pay their gas bill, but use it instead to boost their Christmas shopping, so be it.
A universal benefit says that we value all of our children and all of our older people regardless.
Good debating with you!
ahhh Louise so you do still post here
I wonder could you cast you eye over at the most popular post in the hisrtory of DSB re LDL where your opions have been sought
if Cllr Morrison is lurking pehaps he could so the same
I was actually quite shocked to read Louise's post - it's so patronising.
Steve is right - neither Louise Baldock nor Paula Keaveney (who I'm sure had some post to do with governance and ethics in the late lamented LibDem 'administration') have had anything to say recently on the LDL business - on their own blogs or elsewhere.
As for Morrison - I don't really think anyone expected him to have anything constructive to say.
If any of them are remotely indicative of the rest of our elected members, it's anything but surprising that we're in the mess we're in. Depressing.
Sorry Louise usually concur with many of your views but not this one.
the concept of universal benefits is now becoming outmoded - i believe its incongrous for wealthy parents to as you say spend a bit more on their kids while others who need help might get rejected
in an ideal world it could carry on but the rich tories/libdems can take the hit if it protects those at the bottom end.
and im not in either group - no kids and on low pay( by official govt guidelines)
Katie54, you will perhaps understand it when I say that I find it hard to respect people who hide behind aliases and then make digs at others from the safety of their virtual soap box.
For your information, I have had plenty to say, and in particular have asked a long series of questions about LDL, you may take that to the bank. I have been one of the biggest public critics of the LDL contract since I was elected to the council. I am however having those conversations in private at the moment, with my colleagues, which is what a collective cabinet discipline requires.
Back to the 80's - I believe in Universal Benefits - like the NHS for instance, it should be available for everyone, not linked to income. If we value something, it should be there for all. I think we are on a very slippery slope if we don't defend these pillars of the Welfare State.
Louise, it isn't a question of "hiding" - Like many other contributors to this and other blogs, I am not a public figure, and value my privacy. It may be cowardly, but it's valuable for contributors to be able to comment anonymously - I'm thinking in particular of Formerly Of This Parish's account. Do you really think he or she would have been so honest if they'd not used an alias?
Not everyone wants to be in the public eye. You're a politician, I'm not. Yes, I'm a wimp, but which would you prefer - for information to be out there, hopefully stimulating and informing the debate, or for the obfuscation and stonewalling to continue ad infinitum?
As for my criticism of your comment - you may not have intended to sound patronising, but that's certainly the impression the comment gave - what's wrong with my saying so?
Oh, and for what it's worth, I agree with you on universal benefits, Louise.
But I stand by what I said about LDL. I know perfectly well that you and others have long complained about overcharging etc. But that is not actually what the current debate is about. The overcharging thing is a given. We all know about it. But none of you appear to have given enough thought to how and why it all happened.
Hi Louise
admire your stance on CB and the principle of universal benefits- but we aint going to agree on it .
direct benefit where its most needed and has best results - people with 6 figure salaries can cope with 50 quid a week less even if theyve got 3 kids- agreed?