In his blog post in today’s Daily Telegraph Lord Tebbit asks, “Why won’t the two main parties do anything about the madness of taxing the poor?’.
“And I hate to say it, but only one party leader seems to have grasped that, if you construct a system where unskilled people are worse off by taking a job than by staying on welfare, they remain trapped in poverty – and that is Nick Clegg.
“It is madness to claim that people so poor that they need welfare payments are at the same time sufficiently well-off to pay income tax. The effect is that people at the bottom of the stack living on benefits who try to get back into work are hit by 20 per cent tax, 11 per cent National Insurance and benefit losses that can add up to almost 100 pence in the pound. It is all very well for the better-off to complain about the disincentive effect of losing 50 per cent of every extra pound they earn, but what about the poor devil at the bottom of the stack who loses 90 per cent?”
Fair taxes for all was the first step given by Nick Clegg in his four steps to a fairer Britain, launched on Monday. Under the Lib Dem plans, no-one will pay income tax on the first £10,000 they earn, meaning millions of low earners and pensioners will stop paying taxes altogether, while millions more will get hundreds of pounds back in their pockets.
Lord Tebbit concludes:
“It need not cost that much. There would be a huge saving in benefits if we got those people back into work. We could redeploy all those people shuffling paper and money around the tax and benefit system to some useful work. And it would be easy enough to lower the 40 per cent threshold so that better-off people did not benefit from the increase in the basic rate threshold – so why don’t “the party of the workers” or “the party which believes in incentives” say they’ll do it? Why leave it to the Lib Dems, who are not going to have the power to do it?”
Sounds like one good thing that might come out of a hung parliament, Lord T?