Former Lord Chancellor calls for marriage tax breaks to support poor families
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Lord Lawson has called for married couples to be recognised in the tax system, saying that the policy was the “most cost effective” way of helping poor families.
Report
Writing in a report commissioned by Christian charity Care, the former Lord Chancellor said that “the case for transferable allowances remains as strong as ever,” arguing that marriage tax breaks would be a better way to help low-income households than increasing personal allowances.
“It [transferable allowance] is not only family friendly but provides a far more cost-effective means of reducing the tax burden on low-income households than can be achieved by an across-the-board increase in personal allowances,” he said.
Unfair
The report, entitled Independent Taxation – 25 years on, Does it meet today’s needs? argues that the current system results in families facing an unfair tax burden.
“Since 1990 income tax rates have come down. In 1990 the basic rate was 25 per cent; in 2013 it is 20 per cent,” the report pointed out.
“The tax threshold for single people has risen significantly, with the result that the burden on such individuals has fallen.
“By contrast, the tax threshold for families is scarcely higher in real terms than it was in 1990, with the result that, even though the basic rate is lower, the income tax burden on some families is much the same as it was then.’
Insensitive
It concluded that the present system showed “insensitivity to family responsibility,” and was “in no way consistent with the objective of making Britain the most family friendly country in Europe.”
It added: “One-earner families face more fiscal discrimination in 2013 than they did in 1990 and marginal tax rates that apply to families are much higher than they were in 1990.”
Lord Lawson also argued that the transferable allowance must be “more generous” than the £150 per year proposed by David Cameron, which he described as “too limited.”
Pressure
The comments will place further pressure on the Prime Minister and Chancellor George Osborne to deliver on their promise to include marriage in the tax system before the 2015 general election.
Nola Leach, Care’s chief executive, said: “I hope that Lord Lawson’s intervention and the publication of this report will further strengthen David Cameron and George Osborne’s resolve to deliver on their manifesto promise to introduce the transferable allowances and to do so they are fully operational by April 2015 and on a much more generous basis than that proposed by David Cameron in April 2010.”
Injustice
Anne Fennell, spokesman forMothers At Home Matter - a pressure group for stay-at-home mothers, said:“Unlike our current Chancellor, Lord Lawson clearly appreciates the injustice in the current tax system towards stay-at-home parents.
“We welcome his initiative 25 years later to remedy the injustice caused by a tax system which does not recognise the family unit. Many more couples face a ‘couple penalty’ today if they choose to live together as husband and wife than they did 25 years ago and this falls largely in the poorer half of the population.”
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