Monday, 4 October 2010

Child benefit scrapped for high earners

It's Tory party conference time in Birmingham and Chancellor George Osborne has announced his latest wheeze: scrap child benefit for higher rate taxpayers.

Of course "higher rate taxpayer" is a bit ambiguous these days, does he mean the 40% rate or the 50% rate? Well, he means anyone earning over £44,000 a year (ie, quite a bit closer to the 40% than the 50%.)

But he's not considering both parents together. So if two parents each earn £30,000pa they get to keep the benefit, but if one parent earns £60,000 but the other stays home to look after the children then they lose the benefit.

This is blatantly unfair and it will be interesting to see if Osborne manages to make his policy stick.

Child benefit is worth about £1,000 per year for the eldest child and £700pa for each subsequent child. The total cost to the country is about £11bn per year. (Most parents are also able to claim child tax credit.)

Child benefit has long been criticized because it is paid to the needy and the affluent equally. So cutting it isn't such a bad idea. But doing it in such an unfair manner is dire.

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