THE introduction of independent taxation a quarter of a century
ago by the then Chancellor, Nigel Lawson, has failed in its stated
aim of introducing fairness for families into the tax system, a new
report by the charity Care suggests.
In a detailed study, Independent Taxation - 25 years
on, Care argues that "one-earner families face more fiscal
discrimination in 2013 than they did in 1990. . . The tax threshold
has scarcely risen for families."
The report acknowledges that the individual tax burden has
reduced significantly over the past 25 years. It argues, however,
that the absence of transferable allowances, which were part of the
original package of reforms first proposed by Lord Lawson in his
1985 Budget speech, "has resulted in families' bearing a greater
share of the income burden than before the changes".
"The reformers wanted to make the tax system fairer for married
women . . . and to reduce the discrimination against one-earner
married couple families," the report said, but "even though the
basic rate is lower, the income tax burden on some families is much
the same as it was then."
Care is calling for the introduction of transferable tax
allowances for married couples, and it has won the support of Lord
Lawson. In a foreword to the report, he says that the "watering
down" of his proposals for transferable allowances "had occurred
largely because of the then Prime Minister's pronounced lack of
sympathy for mothers who stayed at home to look after their young
children rather than going out to work".
He said that "the case for transferable allowances remains as
strong as ever. . . It is not only family friendly but provides a
far more cost-effective means of reducing the tax burden on
low-income households than can be achieved by an across-the-board
increase in personal allowances."