New marriage tax allowance - waste of money?
So everyone's favourite Chancellor George Osborne has officially confirmed that there will be an announcement of a tax break for married couples included in his Autumn (Winter) statement. However, the news has not been met with as much jubilation and patting on the back as anticipated, or at least, not outside the Tory party HQ.
But why not? Lots of people in the country are married, surely they would appreciate a nice little tax break from Dave, as he promised back in 2010. The Conservatives like to promote family values, and what better way to do so than to reward proper families for doing the right thing?
The problem is, that the Conservative idea of a family is not necessarily one that is valid and relevant today. Even leaving aside the idea that only married people can be a proper family for a moment, the way in which the allowance is most likely to work will only benefit a small proportion of married couples.
The proposed scheme will work by allowing one spouse to transfer some (or possibly all?) of their personal allowance to the other spouse. Current figures suggest that up to £750 of allowance will be transferable between spouses, which will be worth a whopping £150 in tax savings. But the big problem behind the plan is that, unless one of you has a highly-paid job (like an MP, for instance), for many households, both spouses need to work.
Transferable personal allowance only works if one spouse (not necessarily, but presumably in Conservative-land, a woman) does not work, or works for 'pin money' earning less than (broadly) £8,500. The other spouse must also earn more than around £10,300. This means that the lowest income married families may not earn enough to benefit from the scheme. If both spouses work, or both earn £9,440 or more, there will be no tax benefit of marriage at all. It could be argued that the only people who will benefit are the well-off, who can afford for one spouse not to work, although the proposed scheme could also be income-limited in a similar way to entitlement to child benefit to try and prevent people getting higher rate (40%) relief on transferred amounts.
But proponents of the scheme argue that it will encourage people to get married, which, in turn, is categorically proven in cast iron terms to be better for absolutely everyone involved, including the children, which are an absolute requirement of marriage. But will it really? Is less than £3 a week really enough to turn your head and run down the aisle/gap between chairs in a register office? Even a high street wedding dress costs more than £150. And what about widows? Are they not worthy because their spouse had the indecency to die?
The plan will cost around £550m a year in its current form and will apply to up to 4 million married couples. But couldn't that money could be better spent on something that benefits more of the population, like lowering VAT, or Council tax? Although that would presumably not have the dual effect of pandering to the 1950s notion of family held by senior Conservatives and pissing off Deputy Prime Minister Nick "I have never understood the virtue of a policy that basically says to people who are not married: you will pay more tax than people who are married or, more particularly, married according to the particular definition of marriage held by the Conservative Party" Clegg completely.