A lot of the comments about unfairness focus on the effect on different CB recipients. More fundamentally, it seems unfair that in wanting to increase the burden on HRT payers (OK, sounds reasonable: they earn more) the Govt is proposing a measure that makes HRT payers with children worse off than HRT payers without children. That's why I've written this letter to the Govt. What do you think?....
It is entirely reasonable that, as you seek to improve public finances, higher-rate taxpayers take a larger share of the pain than those on lower incomes. One way would be to increase the higher tax rate to 41% or 42% (somewhere around this raises a billion pounds or so, matching the amount that your proposal reportedly saves). This spreads the burden over far more people than the child benefit proposal. So, please answer this: why is it better to remove child benefit from households with higher-rate taxpayers than to make a modest increase to the higher rate of tax?
My answer is that it is not better: it is unfair and it generates practical difficulties. Leaving aside the ?cliff-edge? issues that have been mentioned recently by the Prime Minister, I give some reasons for my answer below. And please note that Mr Osborne?s answer today that ?it is fair that those who are better off... make a contribution to the saving of money? does not address my question, unless you argue that amongst higher rate payers, the ones with children are better off, as if we make a profit from housing, feeding and clothing a child for £20 per week!
Your proposal means a thousand pounds annual loss in one-child households, and much more where there are more children. By comparison, even a 2p rise in the higher rate would typically take a few hundreds of pounds from affected households. Moreover, households with children are less able to afford a loss than those without. Why take money from children, when you could spread it across all of the better-off?
Clearly a rise in the higher tax rate is progressive, unlike your proposal.
A rate rise is much simpler to administer and to vary than your proposal. The task of identifying higher-rate payers who share a household with a benefit recipient ? then clawing back the benefit ? has political, practical and possibly legal difficulties.
Setting out his principles for tax last year, the Chancellor said ?taxes should be efficient and support growth?. Varying an existing tax rate is more efficient than your proposal. More importantly, a key contribution to growth is nurturing the nation?s children, which a universal child benefit has successfully supported.
The Chancellor also said ?taxes should be... easy to comply with? and ?the tax system should be fair... and ask the most from those who can most afford it.? Removing child benefit as proposed when you could raise a tax rate is at odds with these principles.
Ministers can surely persuade the public that a small tax rise on the ?rich? is better than what amounts to a tax on children. Why are politicians so scared of tax rises? A few years ago, received wisdom said no politician would touch universal child benefit ? so challenging received wisdom is possible! Please show leadership and reconsider.