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UK 'will reap consequences' of anti-family tax laws

10 March 2014   (0 Comments)
Posted by: Author: Tim Ross
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Author: Tim Ross

UK tax regime among the most punitive for families in the industrialised world, according to report from Christian charity Care.

Families in Britain face one of the highest tax burdens in the developed world, according to a new analysis.

A married couple in which one parent works and the other stays at home to care for children pays 45 per cent per cent more in tax in the UK than the average across countries in the Organisation for Economic Cooperation and Development, the study found.

The position has worsened as a result of Coalition policies over the past two years as tax and benefit changes make it less worthwhile for parents to go out to work, according to the report, published by the Christian research charity, Care.

The findings led a senior Church of England bishop to warn that Britain will "reap the consequences” of a tax system that incentivises people to remain single, rather than marry and have children.

The 58-page study, The Taxation of Families, is published this week as the Chancellor, George Osborne, finalises the Budget, which will confirm plans for a new married couples’ tax allowance.

The charity said this reform was welcome but did not go far enough and warned that more must be done to support couples with children, who are increasingly paying the same tax rates as individuals without families to support.

According to the study, written by two fiscal policy specialists at the charity, a married couple with two children on an average income lost 20 per cent of their gross earnings in income tax and national insurance in the UK in 2012.

This was compared to an average tax rate of 13.8 per cent for such families across the OECD, and 15.1 per cent across the European Union.

In a foreword to the report, the Bishop of Chester, the Rt Rev Peter Forster, said the British state had a "persistent tendency to marginalise children and their parents financially”.

"The tax burden on one-earner married families is still significantly above the OECD average and rising,” he said.

Bishop Forster said it was "disturbing” that the figures showed Britain "moving ever closer to placing the same tax burdens on families as we do on single people”.

We cannot promote such clear fiscal individualism and not expect to reap the consequences,” he said. "Far from delivering policy solutions to fix ‘broken Britain’ it would seem that the government, at least in 2012, was more interested in exacerbating our social brokenness.”

A Treasury spokesman said: "Because we're getting the public finances under control, we're able to help people who work hard by cutting income tax - the UK has one of the lowest tax-free allowances in Europe - freezing fuel duty and introducing a new marriage tax allowance."

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