Tax-Benefit Reform
The current tax-benefit system is badly flawed. A new system is required - one that provides a fair and reasonable minimum income and fair taxes for all. The Centre will continue to pursue the moral case for reform as well as developing practical ways of helping people understand the unfairness of the current system.
In the UK the poor can be very poor indeed - the very poorest must live on £2,780 per year - compared to mean household income of £50,000 per year (<6%).In 2009-10 the lowest 10% of UK households population had average earnings of £4,300 of earnings plus an additional £5,500 in benefits. (That is an average household income of £9,800).
They also paid more of their income in tax than any other group: £1,200 in direct taxes, £3,000 in indirect taxes - i.e. £4,200. This means they pay 43% of their total income in taxes (only £1,300 more than the total benefits received). The poor also pay the highest marginal rate of tax. They can pay 100% on their earnings, and the poor lose income if they live together (25% tax on income support) and they have no incentive to save or invest.
It is perhaps not surprising that the UK is the third most unequal society after USA and Portugal.
Benefit dependency
If we treat as benefit dependent those household where 20% or more of its income comes from income-related benefits then there are:
- 27% of UK households are benefit dependent
- 23% of all adults and 33% of all children
- 26% of all women and 20% of all men
- 25% of all people
77% of those adults who are benefit dependent are economically inactive. Of this group:
- 52% are retired
- 26% are sick or disabled
- 11.5% are carers
Perhaps we should stop blaming the poor for poverty and instead begin to create a sane and decent society where we make sure everybody is guaranteed a decent minimum income and nobody is robbed of natural incentives to earn, develop and form families.
Do you want to get involved?
If you are interested in this topic and think you can help or want to find out more then please contact the Director of the Centre, Simon Duffy.
Last updated 21st July 2011