Lords defeat government over tax credits cut
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Lady Hollis, from today's debate:
The Guardian said:
They do have their uses. The problem currently is that they are overused, needed to top up artificially low wages, rather than helping those who cannot possibly earn enough to live on. They will probably always be needed in one form or another as a way of redistributing wealth to those who need it.
The government are moving people like the parent in the example over to Universal Credit soon though, so tax credits in their current form probably will die.
You think I support the use of tax credits to top up low wages?
It wasn't the tax credit part of that post I was querying. It was the idea that, if tax credits were removed, employers would start paying more. They wouldn't. People would either go hungry or they'd have to work several jobs and a crazy number of hours to make ends meet. In certain parts of American society this rings true, so it's not like the example isn't there to see.
The simplest way to reduce the tax credits bill is to raise wages until the majority of claimants stop being eligible. This was the basis for the Lords' argument today - the government wanted to cause financial pain to millions just to make a (relatively) small, short-term saving. That was the unfair aspect, not the overarching plan to raise wages and reduce the reliance on tax credits.
The problem can be fixed without next April's cuts. The principle difference is, by making the cuts an additional £4.5bn would be saved by 2020. In the grand scheme of things, that isn't a huge amount of money, particularly when balanced against the impact those cuts were set to have on families across the country.
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What's the difference to a person on a low income? Are poor people here better off after these cuts than those in Iceland?
FoxEye, the resident forum Tory fan club won't let you in, so you can stop appealing to them now.
The fact you used the word "bankrupt" to describe a possible outcome to the finances of a country that controls its own currency is quite telling.
The fact you used the word "bankrupt" to describe a possible outcome to the finances of a country that controls its own currency is quite telling.
Tax credits is out of control. Any benefit that allows the claimant to ask 'would it be worth my while working more hours?' is wrong.
All these 'full-time mummys' on the public purse need to stop.
#Edit: Just looking at the tax credit calculator.
A Couple, 2 kids. She makes 22k he stays at home = £2000 a year in tax credits. So he gets paid (unquestioned) £2k a year to sit around.
That would only take 5000 families to want that lifestyle to cost 10 million.
Another couple. 4 kids. He works 22k, she stays at home = £5183.66 a year in tax credits. Haha, very good.
All these 'full-time mummys' on the public purse need to stop.
#Edit: Just looking at the tax credit calculator.
A Couple, 2 kids. She makes 22k he stays at home = £2000 a year in tax credits. So he gets paid (unquestioned) £2k a year to sit around.
That would only take 5000 families to want that lifestyle to cost 10 million.
Another couple. 4 kids. He works 22k, she stays at home = £5183.66 a year in tax credits. Haha, very good.
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The government has no money that it hasn't collected from current taxpayers or borrowed from future ones.
The £4.4bn is taken from net taxpayers and given back to gross taxpayers who pay nothing net overall (because tax credits aren't the only benefit received).
Simply having tax deducted doesn't make you a taxpayer if you are given more money back.
For some great examples of the flaws of tax credits, see this own goal article from the Guardian.
'Frankly I’m terrified': meet those set to be hit by tax credit cuts
http://gu.com/p/4dezf
Full of people expecting tax credits to fill gaps in their earnings that are entirely of their own making.
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Checks and balances Dolph, checks and balances
There's no breach of convention as this wasn't primary legislation.
Where did you find this calculator?
I earn £35,000 a year, Mrs. doesn't work, and we get £2080 in tax credits a year.
edit: nevermind, I think maybe that tax credits are based on the previous financial year.
Because that's not what's happening, tax credits are not wages they are a top up for low earners, those earners are already being paid properly by the private companies, the credits just improve the standard of living for those at the bottom of the jobs ladder.
In essence tax credits are the government taking from the rich and giving to the poor. This is why Labour liked the idea and the Tories detest it.
How the hell are you getting £2080 tax credits a year? Im on £28k per year and get nothing. I use the government calculator which told me im eligible for £0.00 of tax credits per year. I have my own house, married with one kid
Soldato
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I think he'll be paying the tax man back soon
Maybe their employers should pay them more "their own making" is such a narrow minded thing to say, I'd expect better from you, but wait no, no I wouldn't. Your an A typical child of thatcher, selfish to the core
Very functional, just like the governments we've had for the last 30+ years who have run deficits
Very sustainable, in fact a lot of economic theory would deem it preferable
There's no, or at any time during the 'financial crisis', chance of us going 'bankrupt' no matter what silly sounbite politicians may use to scare you
No-one is disputing that the tax credit system needs reform, all anyone wants to make the reform fair(er) is to taper the cuts in line with the tapering of the living wage increases.
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I wouldn't call that an 'own goal article'. It wasn't written to justify the payments made to those people. It was written to highlight the problems associated with removing Tax Credits abruptly.
The government planned a phased rollback of tax credits via the National Living Wage and changes to tax thresholds. By 2020 I don't think anyone in that article woukd be eligible anyway? The bone of contention that people have had (and still do have) is with the second part of the government's plan - to bring the saving forward a few years by cutting Tax Credits now, leaving people out of pocket for a few years. For the people in that Guardian article, that loss could be problematic - the money makes up a very significant proportion of their incomes.
The big question ultimately is, aside from the government wanting to meet its own targets, why were the cuts necessary? £4.5bn over a parliament isn't a lot of money at all. It doesn't ultimately make much difference to the deficit or the public debt if the proposed cuts don't go ahead.
Perhaps if the Chancellor had spent more time looking at tax credits, instead of laying silly political traps for the opposition, like his plans to permanently over-tax the population - sorry, run a budget surplus, things would be different.
Firstly, that's not true: the Government has income streams over than taxation. Admittedly small ones.
Secondly, once you've paid your taxes, it's not your money. The government doesn't spend your money any more than Tesco does.
Thirdly, Government debts are not really borrowed from future generations since (1) they're rarely paid off and (2) Government spending now helps the economy work better and ensure there's more money for all later.
1. People's circumstances change, just because you're claiming more in one year doesn't mean you're not contributing in others.
2. Who or isn't a net contributor is down to the inequalities in our society. Blaming people who are already getting the rough end of the stick makes no sense.
Of course it does. They pay tax.
Soldato
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Actually according to that BBC financial chap on radio 4 yesterday, the government is on track for a surplus so doesn't actually need to get the 6 billion in savings from this change, so can afford to delay it.
Very. The target should be to run a deficit which is lower than growth+inflation so that the %Debt-to-GDP falls. Government's don't pay off debts they grow and inflate them in to irrelevance.
Which is why the very low inflation levels we have right now are a very bad thing.
Our country is not in any danger of going bankrupt and has not been in any such danger for a very long time. Moreover, contractionary policies like those pursued by Osborne - and this policy in particular - reduce economic growth and thus make us less not more able to service and reduce our debts in real terms.