Sunday, 28 September 2008

The Express gets it.

A couple of days ago I pointed to a blog post which told us that you can be better off on benefits than you might be in work. One newspaper that has got this point is The Express. Here and here, they lay out what is actually happening.

The basic problem, from an economic point of view, is that the tax and the benefit systems overlap. You can be both paying income tax and also getting tax credits and other benefits. So when you income rises just a little bit, you can lose more in tax and the loss of benefits than you gain by the extra income.

There are essentially three ways out of this bind. We can abolish the welfare system...which of course no one wants to do. Change it perhaps, but no, no one is advocating that we simply allow people to starve in the streets.

Or we can spend a great deal more money on the system, money that we don't have.

Or we can be sensible and simply not tax those working poor in the first place. That reduces the marginal tax rates so that those who do go out to work, those who get a better job, or who do some overtime, get a better income by doing so.

That sensible and simple solution is of course the one that we in UKIP propose.

Raise the personal allowance to £10,000 and a lot of these problems simply go away.

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