It's inefficient and unfair to make poor people pay income tax

By Alex Singleton, (7 January 2009)

Published in The Telegraph here

The Prime Minister is considering raising the tax-free allowance to £10,000, John McFall, a prominent Labour MP, has claimed. A dramatic increase in the allowance, which the free marketeers at the Adam Smith Institute have been advocating, would help liberate people from the benefits trap (where it is economically rational to live off the state, rather than work). Personally, I think the allowance should be a bit higher, set at half average income and increasing automatically each year.

It is inefficient to collect direct taxation from those people whose earnings are low, and it is unfair to grab income tax from those poor people who make morally virtuous choice to work, rather than take from society, before they've even had an opportunity to pay for vital items like food and rent.

Unfortunately, there's a big difference between Gordon Brown considering something and actually implementing it. Given his ill-conceived abolition of the 10p tax band, his preference for complexity, and the alarming levels of public spending that he is wedded to, I'd be surprised if he implements the idea.

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