It is well known that George Osborne hates the marriage transferrable tax allowance. So it comes as little surprise that he trying to undermine it now that it is finally to be brought into being.
It was not enough to delay a manifesto promise for nearly the entire Parliamentary term, while gay marriage and the much more generous childcare allowance were pushed through. Now, it seems there is one more spanner in the works.
When the allowance was promised on 10 April 2010, at a derisory rate of about £150 per year, David Cameron promised a partially transferable allowance to all one-earner married basic rate tax payers.
Crucially, a taper was promised so that the allowance would not be suddenly removed as soon as a one-earner married couple’s income rises out of the basic rate tax bracket. Instead the allowance would be withdrawn gradually.
This provision of a taper rate is not an optional luxury but completely central to the provision of a credible allowance. Without it the allowance undermines work incentives (as would any other kind of allowance without a taper rate) and this makes the provision unsustainable.
Amazingly, today it has emerged that the Finance Bill proposes a partially transferable allowance but with no taper rate. This is something you would expect from the opposition – not from the government itself.
As a result, the income of a one-earner married couple only has to move by £1 taking it into the higher rate and the entire benefit of the allowance would be lost in an instance. Thus increasing one’s income perversely actually significantly decreases it.
No one should be surprised at this – Osborne’s loathing for the allowance was clear from the start. It is a conservative proposal after all, and does not sit will with the modern Conservative Party. With friends like these…
This ‘oversight’ can be corrected by a Government Report Stage amendment. If it is not corrected it leaves us in no doubt that the Government was never serious about this policy, and their manifesto commitments are not worth the paper they are written on.