Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

Personal Allowances

The amount individuals can earn before paying income tax will be increased to £10,600 in April.
BBC News Website 18 March 2015 : Budget 2015: What it means for you

So the low paid don’t pay any tax – and this increase makes no difference. The £1,000 savings allowance is a joke if you are already not paying tax. If you are not paying tax why should you have any interest in seeing public spending cut (or feel any gratitude to the Conservatives for raising the allowance)? After all if you don’t pay tax, it’s not your money!

If instead the value of the £10,600 (@20% = £2,120) was paid as a “personal credit” (£176.67 per month through reverse PAYE) and all income was subject to tax, everyone would have a stake in the economy through paying tax (even if the tax paid is less than the credit). They would also feel gratitude to the Conservatives when they raise the credit or cut the tax rate!

If we are “all in this together” we should all feel that we are making some contribution towards public services. Being a taxpayer makes you a stakeholder.

If you are low paid you might see on your payslip:

Gross pay for the month   £500 (not much - zero hour contract?)
Tax @ 20%     £100-
Tax Credit    £176+      
Net Taxation               £76+
Net Pay                   £576

Why should the low paid not see the full benefit of the personal allowance?

If you got the personal credit irrespective of your employment status, you could almost abolish JSA!

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