Child Benefit

The proposed cut in Child Benefit for Higher Rate Taxpayers was the first issue of the new Coalition Government that really made me angry. As a reminder, it was unveiled hurriedly at the Tory Party Conference in Autumn 2010. Cabinet ministers appeared to be taken by surprise - they hadn't been told about this policy. George Osborne did the rounds of the TV studios, giving interviews, and underlining this was 'tough but fair'. I heard the announcement that 'Child Benefit would be withdrawn from all households with a Higher Rate Taxpayer' on the Today programme, and my immediate thought was that they must have made a mistake - surely no Government would introduce a policy that allowed one household to lose child benefit, whilst their next door neighbours, bringing home double their income kept it? But no! This was exactly the policy proposed. Apparently it would be 'too costly' to means test all families, and so this was the easiest way of doing it. Tough but fair.

Tough - yes. Fair - hardly! As time has passed, the minefield of problems of this policy has made itself abundantly clear. The benefit will be claimed back via the tax return of the HRT payer. But tax is charged on individuals, not on couples, for the specific reason that couples do not have to disclose their financial positions to each other. This philosophy has been abandoned if you are in receipt of child benefit. Added to which, a 'household means test' is already in place, for other child-related benefits. It also seems to have been forgotten that the child benefit payments replaced the old Family Allowance in the tax system, which was a recognition that children are not only necessary for the future economic stability of the country, but that they are costly!

In various communications with MPs, plus the Treasury, the reply back is that this is 'tough but fair' and the question is posed; "Why should a low earner pay tax in order to pay a benefit to a higher earner?". I would pose the return question; "Why should a moderately earning household pay tax in order that a household receiving double their income receives a benefit that the first household has lost?". Is it really tough but fair?

So today's question for the politicians is;
"Why should a moderately earning household pay tax in order that a household receiving double their income receives a benefit that the first household has lost?"