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| Tax credits system "too complex" |
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| Written by Administrator | |
| Thursday, 15 March 2007 | |
 With a rare flash of honesty, senior Civil Servant Sarah Walker has admitted that Gordon Brown's much vaunted "Tax Credits" system is baffling parents, and is too complicated.
Tax Credits (TCs) were Gordon Brown's answer to social welfare. In essence, once you've landed your ideal low-paid job, the Government will "top-up" your wages, after they've had their pound of flesh first, of course.TCs were first introduced in the 1999 budget, and were redesigned in 2003. They have widely been regarded as an expensive shambles since their introduction. Their purpose was to "encourage" non-working people to return to work, with the promise of extra pay. However, a part-time minimum-wage job plus tax credits still pays less than the equivalent "no-job with welfare benefits"; thus eroding the incentive to work considerably. Added to this, the complexity of the system meant that many thousands of claimants were (and continue to be) erroneously over-paid TCs (the Government has attempted to claw-back these overpayments), and similarly thousands of claimants have been under-paid (the Government will not, so far as NLF are aware, top-up underpayments). Costly system On average, in 2004-5, recipients of Working Tax Credit and/or Child Tax Credit (the two main TCs) received approximately £2,800 per family per year. In total, a £14bn was paid out. Approximately 7% (£1.1bn) was over-payment, either due to errors or deliberate fraud (according to Government statistics - but beware, Government statistics are not necessarily even close to being accurate). The claimed cost of administering the TCs system was around £420m in 2003-4 (it's hard to tell exactly - the figures are far from transparent); whether this includes the costs of complaint handling, etc. is impossible to tell. Footnote Sarah Walker, the senior Civil Servant in charge of the tax credits system, has previous form - she was heavily involved in the much-derided Intermediaries Legislation (otherwise known as IR35) - which currently costs the Government £100,000s each year in failed prosecutions, and in the Great British Pension Heist - where the Treasury effectively steals £5bn out of private pension funds each and every year.         |
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| Last Updated ( Thursday, 22 March 2007 ) |
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