Current Affairs

Tax Credits: My Solution

tax credits my solution

While everyone is busy labelling those who claim Tax Credits as scroungers, it’s worth remembering why Tax Credits exist in the first place: because the cost of living is higher than a large proportion of businesses are paying their staff.

The cost of having a family in this country is so high that even with one parent working full time, they cannot survive. This is usually the point where people come out with the “not in my day” defense – the one that says people survived perfectly well without Tax Credits “in their day” and that families today are just spending frivolously. To that, I answer this: my father was a lorry driver, and my mum did not work when I was little. They successfully brought up four children on a lorry driver’s wage, and although times were tough, we wanted for nothing. Our school shoes came from Clarks; our cereal was Kellogg’s; at Christmas time our house was filled with toys. We lived reasonably well on a lorry driver’s wage in the 1980s – even though there was a recession. Thirty years later, wages have just not gone up in line with the basic cost of living. How many families claiming Tax Credits today can afford Kellogg’s cereal or Clarks shoes?

These days, families need help to live a reasonably good life…. or do they? Is it the families the Tax Credits are helping? Or are they enabling employers to continue to pay low wages?

I agree that something needs to change with the benefits system; here is my suggestion.

Working tax credits were introduced in 2003 as a way of subsidising wages. Let’s do away with them – but at exactly the same time, let’s start subsidising the companies instead.

We choose a figure that’s a satisfactory minimum annual income for a family, and make it so that every worker earns that amount with a sensible hourly wage or salary. Those companies who say they can’t afford to pay that wage must prove they can’t afford it. They must submit detailed accounts and allow HMRC to go through their finances with a fine toothed comb. They must allow the right-wing media to vilify them as they go, cap in hand, to the government to ask for help paying their wage bill. And while we’re at it, why don’t we get the MPs to justify exactly why they need £74,000 per year to survive. Nobody labels them as benefits scroungers, but their income comes from the same pot as my benefits.

Families claiming Tax Credits will no longer be “on benefits” – they will earn a reasonable living wage like the rest of the population and walk the street with their heads held high, and nobody questioning where they choose to spend their income. Even if they choose to buy a flat screen TV, or alcohol.

I know people who work for massive companies, household names who pay their workers the absolute bare minimum. They are building their name on the backs of this country’s poorest and hardest working people, and it’s about time they were brought to book. While these big companies report massive profits for their shareholders, their low wage bill means millions of families are scapegoated as scrounging benefits scum who are deliberately costing the country billions. Nobody wants to point the finger at the big corporations, lest they take their low-paying, high profit work model to a different country. I say: let them go. 

Big companies have gotten away with this for too long. They pay low wages while simultaneously avoiding tax bills, and we all sit on our hands and say “oh, but if we change the law so they have to pay taxes, they’ll leave.” Let them go. Without a massive supermarket chain dominating the high street smaller independent shops will once again thrive. Without gargantuan coffee chains on every corner, the independents can return. And cash spent with an independent business stays in the local economy. For every one massive corporation, there could be three or four smaller operations – all requiring staff, all subsidised by this new government initiative to pay those workers a decent wage. 

I believe transferring the “benefit claimant” status from the worker to the employer will resolve the majority of the problem with Tax Credits.

It would still leave people like me out in the cold though. I’m self employed, and a single parent. There would need to be some sort of help for people setting up in business; the government could employ the same person who came up with the catchy slogans about making it pay to work, to come up with a clever, New Labour-ish name for it.

And that just leaves the single parents. Those who can’t work more hours because they’re tied by childcare – and a desire to actually see their children from time to time. What if, every time a company employed a single parent, they ticked a box on a form and got twice the subsidy? That could then be passed on as a double hourly wage – then the single parent doesn’t need to do the work of both parents, in order to earn enough money to survive. This working subsidy could be recouped by the CSA (or whatever the PRs have decided to call them now). Perhaps if the cash were already accounted for and guaranteed to be paid out, they would be more inclined to check up on absent fathers, make sure they’re telling the truth about their income, and make sure they pay their maintenance.

 

I’m no economist; I was in the bottom group for Maths at school. There are probably a thousand holes in my plan. But at least I’m trying to find a resasonable solution to the problem that won’t leave millions of families on or below the breadline by this time next year.

If I can think of other solutions to the problem – and I’m not paid to do so – why can’t the people whose job it is to run this country?

 

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Vicky is a single mother, a blogger, a podcaster and a social media trainer. You can find her blogging, business and social media tips at VickyCharles.com.

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