Gary's News and views
Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.
Thursday 5 November 2015
TAX CREDIT REVIEW
The last few weeks at Westminster have been dominated by the debate on our proposed changes to the tax credit regime. I have had a few hundred e-mails about this, although most of them generated by a campaign website so they do not really count. In my office we do not treat these two-click protests as seriously as individual letters or e-mails.
I support the government's attempt to reform this system which is costing us all £30 billion a year. Over the years in my surgery I have been through the details of tax credits with many constituents and I have oft been amazed at the staggering amounts of money involved. It always seemed to me that the system was flawed for two reasons: first it encouraged employers to keep wages low knowing that the state would step in and support their low paid employees and second, it did not incentivise people to work as many hours as they could, which is what the rest of us do.
Reform was long overdue. Even after five years of austerity the government is still paying £75 billion this year more than it is getting in, and it has to borrow every penny of that. Interest on our borrowing this year is over £50 billion, much more than our education or defence budget. Furthermore, the tax credit changes were part of a wider series of changes that include increased child care support, movement towards a living wage and increased personal tax thresholds.
However, reform has to happen in a way that is fair. There were simply too many people losing too much money in too short a timescale. And you cannot blame people for playing to the rules, which is what we all do.
I spoke to Treasury ministers early on in the tax credit debate and said that although I would support these reforms for the reasons set out above, they had to do more to ease the transition for hard-working people who had come to rely on this state support. This review was already in progress when the House of Lords voted to send this decision back to us and now the Chancellor will bring forward revised plans later on this month in his autumn statement. A positive outcome.
I am hoping that these new proposals will help families transition into the brave new world we aim to create. A world of higher wages, lower taxes and less welfare.
The last few weeks at Westminster have been dominated by the debate on our proposed changes to the tax credit regime. I have had a few hundred e-mails about this, although most of them generated by a campaign website so they do not really count. In my office we do not treat these two-click protests as seriously as individual letters or e-mails.
I support the government's attempt to reform this system which is costing us all £30 billion a year. Over the years in my surgery I have been through the details of tax credits with many constituents and I have oft been amazed at the staggering amounts of money involved. It always seemed to me that the system was flawed for two reasons: first it encouraged employers to keep wages low knowing that the state would step in and support their low paid employees and second, it did not incentivise people to work as many hours as they could, which is what the rest of us do.
Reform was long overdue. Even after five years of austerity the government is still paying £75 billion this year more than it is getting in, and it has to borrow every penny of that. Interest on our borrowing this year is over £50 billion, much more than our education or defence budget. Furthermore, the tax credit changes were part of a wider series of changes that include increased child care support, movement towards a living wage and increased personal tax thresholds.
However, reform has to happen in a way that is fair. There were simply too many people losing too much money in too short a timescale. And you cannot blame people for playing to the rules, which is what we all do.
I spoke to Treasury ministers early on in the tax credit debate and said that although I would support these reforms for the reasons set out above, they had to do more to ease the transition for hard-working people who had come to rely on this state support. This review was already in progress when the House of Lords voted to send this decision back to us and now the Chancellor will bring forward revised plans later on this month in his autumn statement. A positive outcome.
I am hoping that these new proposals will help families transition into the brave new world we aim to create. A world of higher wages, lower taxes and less welfare.
posted by Gary @ 09:21
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