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Tax and benefits
There is a furore (among the media at least) over the government’s plan to stop child benefit where at least one parent is a higher-rate tax payer. I think it is a progressive reform that should be welcomed. I find it hard to justify universality of benefits; those with high incomes should not be receiving cash from the state, if for no other reason than that it must be highly inefficient for the government to take money away from us in tax only to give a fraction of it back as a benefit.
I would take the principle further, and state that nobody who pays income tax should receive cash benefits, just as I think that those who live on benefits shouldn’t have to pay income tax.
Perhaps a little more awareness of how much tax we pay would help those complaining about the change to put it in perspective; for most taxpayers the child benefit they receive is dwarfed by the amount of tax that they pay. PAYE does a very good job of hiding one’s tax payments; the money doesn’t reach one’s bank account, so one doesn’t miss it.
Years of writing my own PAYE and VAT cheques has made me very conscious of exactly how much money the government takes from me. I think that as a nation we’d have a very different attitude to the level of government spending if we had to pay income tax out of our own bank accounts.
I would take the principle further, and state that nobody who pays income tax should receive cash benefits, just as I think that those who live on benefits shouldn’t have to pay income tax.
Perhaps a little more awareness of how much tax we pay would help those complaining about the change to put it in perspective; for most taxpayers the child benefit they receive is dwarfed by the amount of tax that they pay. PAYE does a very good job of hiding one’s tax payments; the money doesn’t reach one’s bank account, so one doesn’t miss it.
Years of writing my own PAYE and VAT cheques has made me very conscious of exactly how much money the government takes from me. I think that as a nation we’d have a very different attitude to the level of government spending if we had to pay income tax out of our own bank accounts.
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