Tuesday, 19 January 2010

The Cost of Cameron's Marriage Dowry

David Cameron has been promising to give tax breaks to married couples, you may have picked up on this. What you won't have missed is how he is intending to pay for this, because he hasn't told us.

Today the Guardian has looked at the options and just how unfair or untruthful David Cameron is likely to have been with his pledge.

Firstly the most obvious thing is to allow transferable tax allowances between couples. According to treasury figures this would cost a total of £4.9 billion, which in or current climate, especially with the Tories promising to accelerate spending cuts seems a high price to pay. Also such a scheme would only benefit couples where one partner is earning less that £6,435 a year. It really does favour the couples where a wife can stay at home, but does nothing to help two hardworking parents who both work full time to support their family.

However, the Tory think tank the Centre of Social Justice run by former leader Iain Duncan Smith is urging Cameron to only limit such a transferable allowance to couples with children under the age of three. Is is any wonder that Cameron isn't prepared to come clean about his policy? His bribe is to all married couples but his advice is actually to limit it still further to just that three year period.

The CSJ had first proposed the transferable allowance in 2006 but today in their Green Paper on the Family they say:

"In the long term we recommend the implementation of a transferable tax allowance for all married couples, but in the current financial climate we recommend a staggered implementation. We believe that as a priority, a transferable tax allowance should be introduced for married couples with children aged 0-3, the formative years of a child's life."

This will cost £600 million but is nowhere near the promises that Cameron has made in recent weeks. Of course he also had added on civil partnerships to his scheme, even if a same sex couple had children they may be from a pre-existing relationship and not count towards the under three threshold, or be adopted and not give the break for the full or any of the 3 year period. It also means of course that a mother in an abusive relationship with an infant could flee and struggle with the tax hike as not all marriages live up to the Tory idyll.

Yesterday defending his claims that he wasn't guilty of 'social engineering' David Cameron said:

"I will celebrate our commitments. I believe we need to try and build a society that is more about "we" that about "me" where we celebrate togetherness."

Seeing as his tax proposals so far benefit married couples, or with inheritance tax the super-rich 3,000 including George Osborne and David Cameron, doesn't seem to not be much about "we" and somewhat about "me". The Tories are also going to freeze all public sector pay over £18,000, or in other words even if you earn over £8,000 less than the national average, while giving away these tax breaks to others.

David Cameron also said:

"The tax burden for everybody is going to go up unless we get public spending under control. We should be trying to help couples with children."

The Lib Dems have realised that the tax burden is unfair, but rather than focus on couples with children who need help we are focusing on the poorest in our society. Raising the tax allowance to £10,000 will raise 4 million out of income tax altogether, including most of our pensioners. It also means those that have to scrimp at save at the bottom end of the ladder will get help. The Tories are not making promises to the poorest apart from the fact that your tax will go up, but if you're married with kids we'll try and help you out.

UPDATE: I'm quite glad that Cardiff Blogger has also called it a half-baked idea emphasising the element of the CSJ document that seems to suggest the allowance will make people get married quicker.

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