Monday, August 03, 2009

Overtly overdue...

Welfare state reduction: the one thing that is on everyone's list to be reformed, and drastically. "Total spending on social security will reach "unsustainable" levels this year, a think tank warns, as handout payments now equate to a quarter of the government's entire budget." reports Ian Johnston in the Daily Telegraph today. [DT] The UK benefit system has become extraordinarily complex that nobody doubts it's vast and gross expense to the taxpayer AND it is in fact 'damaging' to the claimants! So says leading tax specialist David Martin who demonstrates this what he says in a new report [Centre for Policy Studies] Benefit simplification: how and why it must be done.

"[He] illustrates the complexity showing how marginal withdrawal rates can be as high as 95.5%. For example, a single woman who works 30 hours per week, for every extra pound that she earns she pays a further 20p in income tax, 11p in NICs, and loses 39p in Working Tax Credit, a total of 70p. The extra net income of 30p (after these deductions from the extra pound) reduces her Housing Benefit and Council Tax Benefit by 85% of 30p, or 25.5p. Her marginal deduction rate is therefore 95.5% (70% + 25.5%)."

The main proposal for simplification and cost reduction would be a single agency with just 'one form for all benefits and a single website'. Any change for the better can't come soon enough, let's hope it's not just more thinking the unthinkable and then not getting the chance to do it!

H/T Conservative Home.

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