Views
Making work pay - for The Inverness Courier
HOW much of a person's income is it reasonable to pay in tax? Last week, at the Conservative conference, complaints were heard that the very reasonable higher rate of 40 per cent is too high.
But those on the lowest incomes look with envy at this rate, as a report from the highly respected Institute of Fiscal Studies confirmed.
The IFS's detailed study showed that people on the lowest incomes can face effective tax rates of up to 90 per cent because of the way that Gordon Brown's hugely complex tax, tax credit, and benefit systems interact. These figures are a damning indictment of the fairness of our society today.
When someone on a very low wage looks at the reality of working more hours or moving to a slightly better-paid job, the reality can be that they will only keep 20p or 30p for every extra £1 that they earn. The 10p rate of income tax kicks in at a relatively low level, and housing benefit and Council Tax benefit are withdrawn at a combined rate of 85p for every £1 earned.
The tax credit system was set up to boost the incomes of those on low wages, in order that work would be seen as a worthwhile option, and it has certainly succeeded in raising incomes for many. But it has been beset by problems. Firstly, the administrative failings have been severe and the overpayments built into the system have left far too many families with dreadful financial problems.
Britain should be a land of opportunity not a state of dependency. People need to know that by working harder they can improve their quality of life.
The House of Commons returned this week after the summer recess, and one of the big items on my agenda is the welfare reform Bill. I support the aim of the Bill to help many more people who are currently sick or disabled off benefit and into work.
This can best be done by improving the quality of back-to-work support, tailored to the needs of the individual. I would like to see much more use made of the voluntary sector in delivering these services.
But at the same time that central government is starting to grasp the importance of working with the voluntary sector, it is deeply worrying that Highland Council is talking about cutting back its funding to such groups. I believe that such cuts would be a false economy, for which we will pay a price for many years to come.
Specialised voluntary organisations are very often more effective at delivering services than the public sector. The expertise and dedication of the people involved adds real value and - certainly in the welfare area - costs are lower and outcomes better too.
Volunteering also benefits the volunteer and the community - we should be encouraging more people to get involved, not less.
Posted on: 10/10/2006
