Monday, October 04, 2010

Why should millionaires get child benefit?

Making cuts is a difficult and often unwelcome activity, but when you are running out of money and spending vastly more than you are earning, cuts are necessary. When making cuts, the chief targets should be to stop spending on things that are not necessary. Targetting benefits of the wealthy is therefore necessary in times of austerity. When cash is short, giving child benefit to those earning enough to pay the higher rate of tax needs to be reconsidered. Whilst only a few higher rate taxpayer are millionaires, compared to the rest of the nation they are comfortable. And if you are fortunate enough to be earning enough to pay the 50p rate, receiving cash benefits other than the state pension is not very defensible.

The financial situation requires some difficult choices to be made. If the decision today to end child benefit in 2013 for higher rate taxpayers is not taken, alternative savings will have to be found. That could be done by cutting benefits of those who genuinely need them. That's simply not an acceptable choice. It could be done by raising taxes further on the wealthy. But what purpose would it serve to tax the wealthy more just so they can be given the money back as benefits? It could be done by raising taxes generally but who would be stupid enough to put up taxes on people on low incomes to pay for benefits for the wealthy? Or it could be done by borrowing more. The result of that however would be cuts down the line to services as we would still need to pay back anything borrowed, with interest.

So, there are alternatives but they each have consequences. Which one Labour follows is difficult to work out. All I have heard today from Labour is Liam Byrne (he of There's-no-money-left fame) who has attacked the plan to end child benefit to the wealthy.

So, if Labour are to continue to oppose this cut, they should at least have the decency to explain how they would pay for these cash handouts to the better off and the rich.

Sent via BlackBerry

No comments: