UK tax system is biased against the traditional family
By Nola Leach, The Conservative Woman:
CARE’s latest tax report again looks at the way different family models are currently treated in the UK tax system in comparison to other OECD countries. Like previous years, it demonstrates that the UK is an extremely cold place for one-earner families with two children on the OECD average UK wage. In fact, if you compare how a traditional family model is treated compared to a single earner with no family responsibilities, it quickly becomes apparent there is a deeply entrenched bias in our tax system against family responsibilities. Using the latest OECD figures, our analysis makes the case for the government to expand the transferable allowance for married couples as a means of addressing this unfair tax burden.
For nearly a decade now we have been producing reports demonstrating the problems faced by one-earner families. In 2007 we argued that the best way to address this problem would be through the introduction of a transferable allowance for married couples. We were delighted when the Conservative Party embraced this but very disappointed that when it came to it all that was offered was a provision allowing a non-working spouse to transfer 10 per cent of his/her tax allowance to the working spouse, leaving 90 per cent of their personal allowance, unused and unrecognised. While we were very pleased when the provision finally came through last April, we are concerned that what is a good idea has been reduced to a symbolic gesture because it offers too small an incentive to married couples. So small, in fact, only 330,000 couples out of an eligible 4 million have actually signed up. While the recent advertising blitz by the government to persuade more couples to take advantage was welcome, the real problem is it is simply not big enough.
Our new report shows traditional families with two children on the average UK OECD wage face a tax burden that is 25 per cent higher than the OECD average. For single parents with two children on the average wage, the burden is 17 per cent higher.
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