Would you tax credit it? By Mags MacInnes
As philosophies go, ‘helping to make sure that work pays more than welfare and that people have incentives to move up the earnings ladder’,1 sounds cool in the early years of a new millennium. But instead, tax credits simply heighten the good, the bad and the ugly of current economic arrangements. Why else, you might ask yourself, would we so under-value, and under-pay, the core workers at the base of our society? For me, thoughts of the good, the bad and the ugly were triggered by the million pound daily take of a flagship, red, white and blue supermarket in my small town and the thought about the profits made and the tax credits consumed. Successive governments have wanted people to work more; and for more people to work. And recently they have wanted them to work for longer hours and for more years. They want them to be flexible, and thousands are – lurching from one short-term, variable-houred job to another, in order to make a wage. Meanwhile, as the giant corporations focus on their bottom-line the government spends around 16 billion pounds a year on tax credits to bolster an economy founded on a spend – spend – spend necessity. Tax credits do not ensure that work pays more, if we take ‘the work’ to equal the place of work
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and therefore employers, then the working tax credit system provides no incentive for employers to pay more for work. Employers paid more attention in the past (between 1999 and 2006) when they administered most of the tax credits. They faced many of the difficulties now being faced, alone, by current tax credit claimants; delays in getting through to Revenue and Customs (HMRC), constant changes, poor internal communication – the right hand not knowing what the left hand is doing – endless resubmissions of data already within the annals of HMRC, and call centre staff ill-equipped to deal with queries. Jane Kennedy (Financial Secretary, HM Treasury) informed the House last November, that: ‘HM Revenue and Customs wrote to around 250,000 households in August and September about reviewing or inquiring into awards in order to correct an administrative error … No tax credits claimants have yet been advised that their overpayments will be remitted as a result of this exercise.’2 Put yourself in the place of any one of those households – two months or more have passed since that letter dropped through your door.You are all too familiar with the lurid headlines about people having to pay back thousands received in overpayment. Like Jeannie, who I will tell you about shortly, you will have become dependent on the regular receipts of tax credits.You may