Putting my money where my mouth is

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.

7 responses to “Putting my money where my mouth is

  1. Sara Batts

    I’m a trustee of a soon-to-be established CAP Debt Centre in Colchester. What about half to CAP HQ and half to us?

  2. The Evelina Children’s hospital? You’ll struggle to find a more dedicated sold out for the cause group of people who not only help the sick children in their care but also show huge compassion to the families. Everytime I go there I honestly think Jesus if he lived physically now would be among these people.

  3. You could support http://www.magicbreakfast.com/ to give schoolchildren free healthy breakfasts (many of whom might otherwise not have it, and hunger can have a big impact on their education), or http://www.trusselltrust.org/ (umbrella org for many foodbanks across the UK). Both issues are not unrelated to austerity measures. And good on you for pledging to support a charity with this money. All the best with deciding!

  4. Three good organisations:
    Church Housing Trust http://churchhousingtrust.org.uk/
    Taxpayers Against Poverty http://www.taxpayersagainstpoverty.org.uk/
    Zacchaeus 2000 Trust http://z2k.org/

  5. Thanks for all your suggestions. Given the criteria that it would be a charity I’d not previously committed to, I’ll have to rule one or two out. But I’ll look into the others.

  6. Tiggy Sagar

    The organisation Five Quid a Week helps people financially who are in the situation of being under threat of losing their homes due to benefit cuts and who have disability problems. Contact Phil Groom on Facebook. I’m hoping they will help me as my rent has been cut by £100 a month following changes to the local housing allowance – changes which were a scam because they worked out the figures for he lower third of rents by including social housing which is not open to most people, even if they have disabilities. This substantially lowered the perceived average rent amount, leaving no one bedroom properties in the area that it would cover. This has happened to quite a few people I know but has received little publicity.

  7. I applaud you principals and would suggest checking the Charity Commission website fro grant making charities for lists of worthy causes. Try The Distributors of Booth Charities especially