Jeez! Nevr thought I would agree with Osborne although there is a caveat...

Jeez! Never thought I would agree with Osborne although there is a caveat...

He want to save £5bn from the child tax credit system by reducing the upper limit, for example for children from £32,969 to £28,847 because it allows big companies to pay low wages and the taxpayer is subsidising them via the Welfare budget.

I have said for years it has been a way of propping up business at the taxpayers expense. I would never have expected senior Tories to publicly denounce this. EXCEPT!..............

Without some corresponding legislation upping the minimum wage and some tax concessions to small business e.g. lower business /Corporation tax many of whom operate on a tight budget so could not afford to and big Corporate businesses, let's face it, are not suddenly going to cut the board bonuses and share dividends 'out of the goodness of their hearts'. Even if, by some miracle, they did, the time lag between tax credit cuts and higher wages would be considerable.

So, once again the low paid working families will take the 'hit' meaning some of the poorest, it is calculated, lose £845 per child per year in tax credits. All to "...encourage low paid families to 'take on more work'". (Some nice cushy 2 day a month job as a company board member / consultant or private engagement speaker at £10k a pop anyone??)
*************

On a separate rant - I see the EU 'Loan sharks' want Greece to pay a 1.5bn loan instalment by end of June before they lend them 2.5bn (which the can't afford to pay back either)!

In what world does that make any sense whatsoever?? Economics (and basic maths) has changed a lot since I studied them it would seem.

 

Re: Jeez! Never thought I would agree with Osborne although there is a caveat...

Should have been cut years ago. I struggle to grasp the xoncept of being paid to raise a child...

 

Aye got to agree with that. If you can't afford to raise a child without handouts don't have one.

 

Re: Jeez! Never thought I would agree with Osborne although there is a caveat...

Because in the long runs everyone benefits from it. There's not really much to grasp.

 

If you cant afford to start a business, don't expect a business loan. If you cant afford to buy extra equipment to invest in your business, don't expect a business loan.

I could go on....

 

I’ve never quite understood this notion that taxes should be reduced to businesses to encourage them to take on more staff or increase wages. Businesses are taxed on their profit, that’s after their employment costs are taken into account. So employ more people = pay less tax.

 

Apart from the extra employers NI.

 

Re: Jeez! Never thought I would agree with Osborne although there is a caveat...

Do we? How do we all benefit from someone else having a child that needs funding all its life as a child and then as an adult due to not being able to get a job? P's the mother of said job also now needs funding as she has decided to become a stay at home mum and effectively retire at 26.

Personally I would much rather scrap child benefits and giving money to parents and instead replace it with more free childcare and free or heavily discounted child clothing, school meals, toothpaste and the like to ensure that the public money spent is actually going on the children it is intended for

 

LOAN. Your comparison is irrelevant.

 

Let me help you.

If I want to take someone new:

I have to Pay out £1000 per month

yes I Save £200 in tax.

Tell you what I'll not bother risking taking on more staff which might deliver more money (of which 20% I'll have to give to the govt. ) and I'll definately save myself £800. I might not make the extra money but the risk of taking someone on is fairly high.

Or the government could give me an additional tax break. So I'm only risking say £500 per month. I'm more inclined to risk that in the hope of more growth.

So the government then gets the income tax and NI - lets say £200 and doesn't have to pay the benefits - Say another £200.

Net result there is a zero impact on govt. incomes and costs (they don't collect the business tax but they do save the benefits) and more people are working and the economy grows and people feel better about themselves and people are spending more money so more VAT is raised and other people are making money.

And after a year or two the govt removes the tax break and gets the business tax again. And if it's not viable at that point - well it never was so the employee looses his job and we're back to square 1. But there has been a year of employment - a year of experience and a year of income.

That's the theory anyway.

 

I guess all child benefit/tax credits/etc can be seen as a loan. The government gives money to help raise a child and that child grows up to pay taxes to the government. Not necessarily, the child may emigrate, die, or never get a job, but the majority of people pay out far more money in tax than they ever receive. Which is kind of the point. Our society would soon break down without people having kids. They get jobs, do the things we can no longer do as we get older and pay the taxes that fund hospital treatment and old age pensions. The people who have kids get a bit of help so the cycle can continue, but it's small potatoes compared to what the majority of those kids will pay back in.

 

Well put Jay. I still don't agree though.

 

Abolish working tax credit tomorrow and increase minimum wage to at least 10 quid an hour. Use money saved to subsidise smaller employers. Simple.