The George giveth and the George taketh away
The papers give a big fanfare to George Osborne’s announcement that he will cut the benefits paid to the middle classes, by removing tax credits for people earning over £50,000, and stopping Child Trust Funds for all but the poorest third of families.
The Daily Mail gives the total amount saved by these changes as £700 million each year. I don’t know if this is the correct figure, but I am pretty sure the Mail would not have underestimated it. However the Tories have already pledged to raise the threshold for inheritance tax to £1 million per person. The cost for that is £6.1 billion over the course of the five year parliament or £1220 million a year – almost twice as much as will be saved by the cuts mentioned last night.
But are the Tories’ new-found commitment to ‘tax the rich’ really what they seem? The way in which the tax credit system works means that with an income of £50,000, the maximum tax credit that can be obtained is £545 per child. This tapers to zero at an income of almost £66,000. How this is a good salary in anyone’s book, but it’s hardly fat-cat status. The really big earners won’t notice the difference, because they don’t get the credit now. Similarly, taking a £250 grant away from the babies of the very well off won’t be noticed when that child turns 18, especially when set against the huge benefits of not paying 40% tax on much of the grandparents’ £2 million estate.
Who is the better-off, a parent earning £50,000 to bring up a family, or a couple with £2 million to leave in their estates? So a sneakily clever move from the Tories – get loads of publicity for cutting payments to ‘the rich’ whilst not affecting many rich people at all. What better example of the deceitful nature of today’s soundbite politics.
Related posts:
- Lord Tebbit’s praise for the Lib Dems’ tax plans
- Too much of a mouthful, even for the Mail
- I’ve come over all ‘Daily Mail’ today
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