Child benefit concerns

Some concerns are starting to surface among Tory activists about the decision to deprive higher rate taxpayers of child benefit. For example, it is being pointed out that households with a stay at home mum with the husband in the higher rate tax bracket could lose out. Next door a working mother with both parents in the basic rate bracket could be earning more and would keep their child benefit. However, tax returns are made by individuals, not by households and changing this would be a much bigger blow to better off households, apart from being open to criticism as sexist.

The real problem here is that the higher rate of tax in Britain cuts in at a relatively low level. Nothing can be down about that at the moment, but it might be possible to increase the threshhold by 2013 when the child benefit changes come in.

Some tweaking of the proposal may be politically necessary, but the underlying principle is that those on low incomes should not be taxed to make a transfer payment to those on higher incomes.