Cassilis

Something about the '10p tax row' had been niggling away at the back of my mind for a few days now. I couldn't quite put my finger on what it was but there was something about it that spoke to fairly fundamental issues of left vs right. Perhaps if I delved into the detail of the short-lived tax band, how it worked and how it affected people all would become clear?

Where to start then? Let's be fair minded and look to some of the better Labour bloggers - here's Donpaskini for example:

"The substantial increase in Working Tax Credit means that all those who earn from £8,612 (30 hours a week on the minimum wage) up to £13,000 (or up to £17,200 joint income if they are in a couple) are better off. Even if you don't have kids, you can claim working tax credit.... A large group of single childless people earning £225 to £245 a week are able to claim tax credits for the first time. This includes, for example, thousands of retail workers in Tesco, Sainsburys and M&S working a standard week for around £228 a week..... Some people have lost out. People who cannot claim Working Tax Credit because they work less than 30 hours a week or are under 25 years old and who do not have dependent children will be worse off from the abolition of the 10p band. A small group of single childless people who earn between £13,000 and £15,000 a year will lose out by a small amount – less than £1 a week."

OK - I'll take your word for that Don. Or how about Hopi Sen's spoof email (which I initially fell for) from Labour HQ to help MP's explain the issue better:

"A tax credit sytem is far more effective at targeting resources at those who need them most [b]ecause large numbers of those in the low tax band are in fact second incomes in reasonably prosperous households, whether earners living at home, second incomes or supplemental part time jobs. Looked at on a household, rather than an individual basis, the 10p tax band does not noticeably help low income households in ways that can’t be done better through other methods"

It's becoming clearer but isn't quite in focus yet. Perhaps I should go to the horses' mouth and see what's being said in Parliament - here's Chief Secretary to the Treasury Yvette Cooper opening yesterdays debate:

"It is hard in any one Budget to help everyone, and those who lose in any one year may have benefited in previous years or may also benefit in the next"

Eh... OK. And finally, I thought, let's have a look at the HMRC site and the official details on the tax credits which are supposed to offset the impact of removing the 10p band for most people. But where do I start - there are 42 pages of notes and that's just one of the forms available. There's a helpline but I wouldn't even know what question to ask....!

Anyway I didn't need anymore help because by now I was clear on what had been niggling me about this whole thing. It may not be the most eloquent way of making my point but if the above extracts from the mountains of explanations and excuses available show anything it's this - Why the hell aren't we simply letting people keep more of their own earnings up front?

The introduction of a complex tax credit system (which obviously costs to administer) whose sole purpose seems to be to check that people are indeed entitled to keep their own money is gloriously New Labour. The Hopi Sen extract above gives a small clue to the justification that might be advanced (simply changing rates or allowances won't catch the 'low earner' who's actually married to a company director etc.) but as an overall explanation this won't wash since these are extreme examples.

When governments insist on taking money from deserving people and then ask them to fill out a 20+ page application form (and that's if they're lucky) to prove they're deserving enough to get it back they get themselves and some very vulnerable people into a right mess.