The row over child benefit rumbles on. And it’s beginning to look embarrassing for the Tory party, so much so that many observers are now comparing it to Gordon Brown’s 10p tax debacle.
I just want to make some observations.
*The first is that the Tories seem to have decided cutting the deficit justifies anything.
*There doesn’t appear to be an underlying principle guiding the reform. Bizarrely single income families that are not that well off lose out while two income families continue to benefit.
*Repeating that it’s “fair” over and over again on a tax/benefit issue doesn’t make it so, especially to numerate people who can do their own sums. Especially to tax advisers and accountants.
The worst point is that tax advisers will recognise where we are now. The Treasury launches a benefit/tax policy without apparently consulting or taking sound advice and then finds itself facing a storm because other people have noticed the obvious flaws and worked out the unintended consequences.
Machismo driven politics doesn’t add up to good tax and benefit policy. Tax advisers wanted the new chancellor to take his time, speak to people, take advice and consult before making the big decisions. They will be disappointed at the way Osborne has dealt with child benefit.
In particular because the answer to the problem now is to apparently now to dabble with PAYE thresholds. So, now we have policy on the run, made up as the government hits squalls and tempests. Not a good strategy, but is this an early sign of how things will be done by the Treasury. If it is, then tax advisers will go on being disappointed.
This morning’s papers have already begun publishing ways to dodge the child benefit bullet. There are plenty of them if you have income just in or around the 40% threshold and some will benefit those who are on much higher incomes. Once that happens you have to wonder just how much money will be saved by this policy.
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