Child benefit nightmares – this is Osborne creating his 10p tax rate moment

Posted on

So the Tories are going to cut child benefits for any couple where one is a higher rate tax payer.

I agree the principle sounds sensible.

The result will be a nightmare.

Let’s consider some obvious issues.

First there is no legal obligation on a couple to tell each other their income.

Second it encourages divorce!

Third it will create a marginal tax rate of well over 100% at around £44,000 of income for many people.

Fourth, many people do not know at the start of a year if they will be higher rate tax payers.

Fifth, many will not know at the year end either – partly because of benefits in kind.

Sixth, the reporting mechanisms will be a nightmare – and the penalties will have to be high.

You can go and and on with the craziness of this from a pro-family ant- bureaucracy pro-middle class party. And I’ll guarantee this – Osborne is creating his 10p tax rate fiasco before our eyes. It’s almost amusing to watch it is such a disaster in he making.

And all this to save a billion of so when I have shown him time and again easy ways to raise that money. Which proves it is politics, not economics, driving this.

Why say that - because he wants the link between the middle class and benefits broken for good so they never again vote to protect those on benefits. That's why. But I doubt his own will forgive him for this. Taking something away is very hard - always - and deeply resented, as any parent knows. And Tory parents will behave like their kids on this one.