The 6th of April marked the start of a new tax year. At this time, there were a number of changes to the rates and bands in income tax and national insurance. Other changes to the social security system began on the 1st, with the government coming in for much criticism, in my opinion rightly so. One of the consequences that was much vaunted was Iain Duncan Smith declaring on radio 4 that he could live on £53 per week. I don’t think I could. During my time of being unemployed last year, I received £142 per fortnight. This was to cover all expenses: rent, council tax, food, utilities and travel to and from interviews. Some people told me that I ought to have been able to claim more, but this was flatly contradicted when I asked staff at the Job Centre Plus. Anyway, there was a public demand for Iain Duncan Smith to stay true to his word and demonstrate that he could live up to his claim. This was later dismissed by him as a “stunt”. Yet over 19 times as many people have signed that petition as voted for him at the last general election (at the time of writing, the figure stands at 438,210 compared to his election vote of 22,743). I wonder if his election was a stunt too.
It struck me that since he was being asked to put his money where his mouth was, it would only be right to be willing to do so myself. I ran some figures through the BBC budget calculator and worked out that in the 2013-14 tax year I will be about £179 better off. The thing is, though, I don’t think I should be better off. If I didn’t contribute to a defined contribution pension scheme or didn’t gift aid any donations then I would be a higher rate tax payer. As such, I know that means I am a hell of a lot better off than most people in this country.
The economy does have a problem with a large deficit and efforts should be made to reduce it. However, I disagree with the way the coalition government has gone about doing this. Instead of asking those who are most able to pay, the onus has been on those who have the fewest choices: the poor, the disabled and the unemployed. There is a paranoia among those on the political right that if you apply the sensible notion of “from each according to their ability, to each according to their need” then this will result in those who pay the highest marginal rate of tax choosing to leave the country, thereby denying the economy of their spending power and robbing the treasury of potential tax revenues. So those are paid excessively more than they need to live on have been given a tax break. But remember, even at the highest marginal rate (i.e. the rate you pay for every ‘extra’ £1 on your earnings), their effective rate (total income tax & national insurance paid divided by total gross income) is far lower. For example, though I am a higher rate tax payer, I only pay 42% (40% income tax and 2% NI) on the top few pounds of my earnings. My effective rate is 26.5%.
Yet I am unconvinced by scaremongering which suppose that the rich will flee the country to avoid taxes. Even if a small minority do, shame on them. By choosing to squeeze those with the least disposable income, the government has tried to fix the problem in the most inappropriate way. While it is a good thing in principle to encourage people into work, there have to be jobs for people to go to. Not only that, but they should be jobs that pay a decent wage. To use an analogy, imagine someone being asked to walk along a tightrope. What’s the best way to keep them safe? I would say it is to help them stay on the rope, not by removing chunks of the safety net. Yet the recent raft of reforms seems to be doing the latter
As my salary is above the national average (see link to the report from the Office for National Statistics above for details on the average being £26,500), I think I ought to be paying a greater proportion of my income in taxation. Yet I still get this £179 ‘bonus’ because of changes in the bands and rates. What should I do with this? Well, it would be hard to ‘donate’ it to the Treasury, so I am here, publicly, pledging to donate this to charity. On top of any other giving I may have, I promise I will set up a standing order for £20 per month (I rounded up) to a new charity I have not previously made a commitment to. What I need is your help.
Firstly, I need your help in choosing which registered charity to donate to. Ideally, I’d like it be one that helps those who are worse affected by the changes to social security that the government has brought in. I would appreciate your nominations from which I may then choose.
Secondly, without anyone else taking up this challenge, this will be a mere act of tokenism on my part. I would like this to become ‘A Thing’ amongst those of us who are socially minded, are paid more than it costs to live and who feel it wrong that they should benefit while those who are worse off suffer. So I would like to encourage you, even issue you a challenge, to undertake a similar commitment.