TWO DAYS ago we saw the announcement of one of the first cuts from George Osborne in the form of an exclusion of higher rate taxpayers from claiming child benefit from 2013 onwards.
There has been the usual uproar about it being unfair because there are scenarios where couples earning just under the higher rate of tax band can still get it, whereas if one person is a higher rate payer and the other doesn’t work then they cannot get it.
People forget that if couples are both working then they will in many cases be forking out several hundred pounds per week to pay for child care as well as paying tax on their earnings, so they are putting many thousands more into the system than the one thousand they get back in child benefit. There needs to be a realisation by some state dependants that the hand that is feeding them is not the government, it’s people that work in the private sector.
Another thing people forget is that this benefit is for the child, not a little extra holiday spending money. Many people take this benefit and simply stash it in a tax-free trust fund until their child reaches adulthood. This is wrong, and whilst it might equate to a cut which will reportedly save £1bn per year, these people should never have been receiving it in the first place because they don’t need it.
The Daily Express yesterday said that for someone that earns exactly the higher rate of approx £43,850 per year, they would need an almost £3,000 pay rise to offset their child benefit losses. Boo hoo. I know the Daily Express has it’s angle on things but really this isn’t the way this cut should be approached. This benefit is not and should not be classed as supplementary income.
Dave has been talking about a transferable tax allowance for stay-at-home mothers or fathers, but surely this is going to wipe out this forecast £1bn in savings and then some.
Adam Boulton from Sky was questioning Dave yesterday about whether millionaire pensioners would still get the winter fuel allowance, free bus pass, free TV license, and so on, but he would not be drawn on this; perhaps because of the promises he made not to cut them during the televised leaders’ debates before the election.
Taking this a step further, should the state pension be means tested such that people with fat pensions lose the state pension, regardless of whether they have fulfilled their National Insurance commitments?
Images: Press Association