Monday, April 07, 2008

Let them eat cake

When the 10% income tax rate was abolished last year it sent shivers down the spines of many low paid workers. I had a (lengthy and futile) conversation with Ziggy in which we attempted to work out how this would affect him. Our only solid conclusion was that he would be dramatically worse off.

Ziggy is at 22 pretty much the primary wage earner in his household. He lives with his mother and younger brother who is still at school. For some complicated reason I've never been fully able to ascertain his mother is not entitled to tax credits. It's something to do with past overpayment, attachment of earnings that made them dramatically worse off and the odd council tax and water rates debt. Whatever the causes, the end result is that mum is not entitled to claim tax credits to top up her (sporadically attended) part time jobs at a local supermarket and youth group.

That leaves the family completely reliant on Ziggy's wage. Approximately £14, 000 before tax. He hands over the majority of his earnings to his mother either in 'keep' when he first has his wages or usually throughout the week/month to pay for basics like food, gas and electric when mum has run out of money.

Ziggy at 22, with no disabilities or children is not entitled to claim tax credits even in his position as main wage earner. The family are also liable for full council tax as there are two adults in the property.

The only practical conclusion for this family on the loss of 10% tax (which will affect mum too) is as Ziggy suggested to go 'off the books' and start to receive wages cash in hand. How many will feel they have to take this option whilst politicians in Westminster continue to whine about how reversing the policy would be 'less fair' ?


14 comments:

Roland Hulme said...

It was a ridiculous decision. How come it's always the modest-earners who end up paying the most tax? Given what 14k a year can buy as opposed to 24k, the same 'percentage' tax can be interpreted at being grossly unfair.

And what does it get spent on? Dumb stuff like that third Diana inquest - with 'surprise surprise' came to the same conclusion as the previous 2.

10 million quid, that cost the British taxpayer.

Maddy said...

Strangely [since I'm over here] I did hear about this as I download podcasts of 'Best of Today' so that I can keep in touch. Progress nil.
Best wishes

Emma said...

I can't really say anymore than agree with Roland, he has hit the nail on the head perfectly..x

Vi said...

It's mad. He feels he needs to go off the books to get more money, which then in turn, raises everybody elses tax because of it. Catch bloody 22!

transfattyacid said...

It's really pretty simple - Gordon is clueless, the goverment is useless and they make the rules do so for their own benefit.

Food Up, Heating Up, Taxes Up, but if you want some money laundered in the City of London - that's a different matter sir.

frog ponds rock... said...

We are still adjusting to a change of government down here.
Our glorious leader is jet-setting all over the world willy nilly..
whilst those left holding the reins are mumbling about inflation and making ominous noises about major cuts to government spending..

mmm will they cut 'pollies' travel allowances and turn off the heating in the ministerial dunny???

I wish..


cheers kim

cogidubnus said...

Grow up! I've been around a while and learned that despite the hype, Labour governments ALWAYS mean higher taxes (even though sometimes they're disguised)...Labour politicians only know how to borrow money, tax high and spend high (generally wastefully too)...and ironically this nearly always impacts most on the most disadvantaged members of society...

I'm very much afraid we are heading for a really big bust - The IMF have repeatedly warned the government about its tax/borrow/spend policies - back in the sixties and seventies this would've made front page headlines, but somehow the media aren't so sharp today...

Historically the Tories aren't much better - although they tax lower, their benefits/public services policies have been very variable to say the least...though looking at the shit we've swallowed in the past few years...

But more to the point if we stopped pretending to be a world power, then perhaps we'd mysteriously find much more money with which to feed our own poor and less with which to kill and maim someone elses...

Casdok said...

Not a good situation to be in.

LceeL said...

It's the same all over. Prices and taxes and everything else up and income flat. Or down. Or non-existent.

Innocent said...

It would seem that once again those of us who have been generous enough not to swamp the country with children, and live frugally on low incomes have been stabbed in the back yet again. When is it our turn?

Pixie said...

Is is ironic that David Cameron is going with the rebel labour back benchers to fight Gorden on this one. Whatever happened to politics?
pxx

Semaj Mahgih said...

The numbers don't add up.

having my cake said...

I couldnt believe it when they originally announced it. I mean, how obvious is it even to the most mathematically challenged people? Grrrrrr!

BenefitScroungingScum said...

Roland: Couldn't agree more. The benefits bill wouldn't be anywhere near the size it is if tax policies were more sensible, but that's sensible so I won't hold my breath!

Maddy: Ridiculous isn't it?!

Emma: Indeed! x

Vi: Ziggy was just an easy example that sprang to mind. I know lots of people who feel they may have to take this option, which frankly the govt should've and would've known x

Transfattyacid: Absolutely!!

Kim: I know, it's just so stupid! x

Cogi: Ouch! The '97 election was the first I was old enough to vote in, but I can remember tory govt only too well. The big worry now I think is who can we possibly vote for to elicit the right changes?! As for the bust, naive I may be, but is it something that has to happen to 'reset' things?

Cas: Not for any of the 5 million in it who the govt don't care about

Lou: Tell me about it, my heating bill just doubled, ouch!

Innocent: Never I should think, we're not 'middle england' and so not important. Gah!

Pixie: I know, what choice have we realistically got now?!

Semaj: who's numbers, mine or ole google eyes? His never add up though;)

Cake: Exactly!!