Cut middle class welfare – 1/5

Shortly before the last General Election, the TaxPayers’ Alliance produced a manifesto. Here is the latest in our series of posts looking at how the Coalition Government has performed in relation to our recommendations.

The full TaxPayers' Alliance manifesto can be found hereClick here to see the full series of posts.

Steps were taken by the Government to reduce things like Child Benefit and tax credit eligibility for families with household income above £40,000. But many of the measures were poorly designed, particularly the announcement on Child Benefit. Mike Denham found in his book Burning Our Money that £5 billion was given in benefits to households with a total income of more than £100,000. This is not good enough. We still take far too much money from people in taxes and hand it back in benefits.

This fiscal churn is not only extremely wasteful, but perpetuates the idea that politicians and bureaucrats can spend your money better than you can. The tax credit system is in dire need of radical change – it tops up low wages which means that companies don’t need to offer pay rises to staff. Cutting taxes across the board will leave companies with more money to offer pay rises and more money in people’s pockets to spend on their own families. Having well-off households in receipt of benefits paid for by the taxes of those less well-off is an absurd situation, and not enough action has been taken on cutting back on things like the Winter Fuel Allowance and free TV licenses. Therefore we can only score the Government a 1.

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