Question Time and marriage tax

I was out and about in Hodge Hill yesterday, so didn’t get time to blog about Question Time, broadcast from the Milton Keynes shopping centre (where the centre manager was telling me they had an absolutely bumper Christmas). Here’s the link if you want to watch it. You’ll forgive for me saying this, but I thought the most interesting debate was about the Tory marriage tax.

Now, I happen to believe that marriage is the absolute bedrock of society. But I believe when it comes to public money we should use it to help parents do the toughest job in the world; bringing up children well, especially, I might add because I think people get married for love not tax allowances.

Some estimates of the Tory plan – the transferable tax allowance for married couples where one partner is working, as proposed by Ian Duncan Smith, cost an incredible £5 billion – yet the Tories plan to cut Child Trust Fund from families on over £16,000, cut childrens’ tax credit from families on over £31,000 and cut Sure Start provision from middle income families.

The Tories have of course not said where the money would come from, and yesterday senior Tory backbenchers were suggesting the money would come from ‘green taxes’ ie petrol duty.

I’m afraid this sounds like the triumph of slogans over solid policy. And I thought the Question Time audience spotted it mile away. More on this to follow….below is what David Cameron has said about marriage tax, and the costs of the proposal set out by Ian Duncan Smith

David Cameron promised his plan will ‘recognise all marriages’

Jon Snow:

“One of the most damaging things is when a marriage breaks down and ends in divorce. You get married again – you get it again? ”

David Cameron:

“Yes, it’s a married couples’ allowance … it’s a recognition of marriage, so those people who, and we haven’t said precisely how we’re going to do it, but if you recognize marriage and the tax system then you recognize all marriages, yes of course.”

David Cameron, Channel 4 News, 12 July 2007

The Centre for Social Justice Green Paper on the Family p19, Recognising marriage in the tax system

The UK is rare among European countries in its failure to recognise family in the tax system. The vast majority of European countries, including France,Germany, Denmark and Norway, recognise the caring role undertaken by a spouse in families in which one chooses to stay at home and the other to work. This role is highly valuable to society and a transferable tax allowance recognises and supports this. Except for married couples in which at least one spouse was born before 1935, since the Government’s eradication of the Married

Couples Allowance no such provision is available in the UK tax system. We believe that a transferable tax allowance should be introduced in the UK. This would send a clear signal in support of marriage as an important institution. It would also have the practical benefit of supporting and recognising those spouses playing vital, unpaid caring roles. This could be achieved in a number of ways with differing costs – all of which are a fraction of the £20-24 billion annual cost of family breakdown. In the long-term we recommend the implementation of a transferable tax allowance for all married couples, but in the current financial climate we recommend a staggered implementation. We believe that as a priority, a transferrable tax allowance should be introduced for married couples with children aged 0-3, the formative years of a child’s life. Different scenarios could include:

_ For all married couples: £3.2 billion

_ For married couples with dependent children or in receipt of Carers Allowance: £1.5bn

_ For married couples with children under 6: £0.9bn

_ For married couples with children aged 0-3, the most important years for a child’s development: £0.6bn

A transferable tax allowance of the full personal allowance amount would provide an additional £20 per week. We do not believe that this will incentivise marriage, nor should it, but it may encourage more couples to make the transition from co-habitation to marriage and thereby increase the stability of their relationship. Although a modest sum, £20 a week could make a significant difference to low income families. Importantly it will provide the symbolic recognition of the value of marriage.

37 See the Centre for Social Justice, 2006, Breakdown Britain, Volume 1 Family Breakdown, Appendix:

Supporting marriage and encouraging couples to come together

38 The Centre for Social Justice, 2006, Breakdown Britain, Volume 1, Fractured Families,C11 39 Costings are estimates worked out by the Institute of Fiscal Studies on behalf of the CSJ, all but the 0-3 scenario were costed in 2007 for Breakthrough Britain, the 0-3 scenario was costed in 2009

Mr Cameron quote Tory intention to use green taxes

I think it would help though if our politicians when we put up green taxes on pollution we should I think cut taxes on other things to prove to people that it really is about being green and not just about taking their money. And so if we put up taxes, if we propose extra taxes on gas guzzling cars or air travel, we will take taxes off families and maybe do some of the things like the transferable tax allowance I mentioned earlier.

David Cameron, BBC Radio 4 You and Yours, 20 February 2007