Is there an alternative to cutting child benefit?

DavidDP

"Many of those whose combined income is roughly £44,000 - £55,000 are saying they’d be better off divorcing, "

In2minds

I've never understood child benefit, why, what's it for, who is supposed to benefit, the child? It's a left over from post WW2 what's the point of it?

Ian Walker

Here's a thought that would be effective means-testing, but without the scope for "cheating" or the massive administrative costs.

Let people "opt out" of child benefit, in exchange for a small (0.1%? 0.5%?) tax cut. Let people change between status on a yearly basis without penalty. They would then opt-out when it was favourable to them, without an arbitrary cut-off point, and without needed a complicated set of means tests.

You could actually do the same for all universal benefits, and even more excitingly, make all benefits universal.

The upshot of that would be a society where those who moved onwards and upwards would pay progressively LESS marginal rates (although obviously a higher gross amount) but would receive less in return.

GeoffH

"Many of those whose combined income is roughly £44,000 - £55,000 are saying they’d be better off divorcing,"

And, of course, these are the very same people who attack the idea of a married couples tax allowance on the grounds, largely, that no one gets married for a small tax break.

As ever, people are only in favour of cuts or tax increases that 'other' people pay.

R2-D2

Generally, the more complicated the system, the more anomalies there are, so any further means testing would just make it worse. Universal child benefit is simple and fair, and it should not be turned into a duplicate of the child tax credit system.

P.S. What use would a pension be? Families need the money now, not in 30 years' time.

Yosemite Sam

I despair. The country is up shit creek, and when a proposal to remove benefit from some of the better-off families is revealed, there is a chorus of outrage from all and sundry. No constructive propsals; just 'not my benefit gov'. What kind of country have we become!

Tendryakov

I have to agree with in2minds above.What is child benefit for? It's an anachronism. If women want to have babies, let them for them. What's the problem? At the very least it should be restricted to the first child. Full stop. It's not as though Britain's down to its last 100 human beings.

David Bouvier

Ian - any system that lets people choose the more rewarding of two options, with one option being the status quo can only cost more money! Not going to help.

Also your thresholds are completey out.

For one child (c. £1000 per year child benefit) you would need a 2.7% reduction in tax on all income above the tax free allowance to make it preferable to opt out for entry level higher rate tax payers.

A 0.1-0.5% cut change would only be attractive to people between ~£200k and £1m annual income.

But as I said it is a scheme that totally fails to cut spending at all - instead actually increasing it.

Not sure what you were thinking.

John

Yes reform the system, yes go back to a household based child tax allowance which worked perfectly well before the tinkering started, but introducing a scheme where a couple with 2 kids and both parents earning £43k will KEEP their benefit on a joint income of £86k, but a couple living next door with 2 kids and only one parent working earning £44k will lose it.

Limit it on household income if you must, but to do it this way is so crass it simply defies belief.

Barry Bilge

Some alternatives:

Child benefit stops at the age of 13.(As Ireland does?)

Limit it to 2 children for new claimants. Existing families with 3 or more children continue as they are. Families with two or fewer children get no more money once they pass 2 children.

Both could be implemented pretty much straight away.

HampsteadOwl

Yes; cut children

Mrs.Josephine Hyde-Hartley

"This is unaffordable, so the government needs to find other means to address the issue as best it can."

What issue? Child benefit is surely dedicated to each child usually via their mum, who may be the most sensible parent. This is about austerity, as I understand. We should have to be content with what we've got if we want to avoid the unnecessary deprivation ie universal means testing.

Kennybhoy

GeoffH wrote:

"As ever, people are only in favour of cuts or tax increases that 'other' people pay."

There is a joke in here somewhere. Something along the lines of a liberal is a conservative who has just been arrested.(Insert sad chuckle...)

Major Plonquer 1

Isn't it aweful that the Tories can't even afford a whole Union Jack?

Ian Walker

David Bouvier: The idea is that higher earners pay less percentage tax, but higher tax overall.

It's a hard sell to people brought up with the socialist "soak the rich" mentality, I'll admit. But by eliminating all increases in the marginal rate, you promote growth, and thus increase the net tax receipts. It's not hard to tune the system to be revenue neutral overall.

J Petley

From Sam Yosemite's comment it appears he's prepared to voluntarily pay an additional £1-2K PA to help get the country straight. He probably doesn't have kids so can easily afford it...

Boudicca

Osborne should have started by withdrawing Child Benefit for the children of immigrants. Why should people who turn up in our country and never paid a penny in tax, be able to claim Child Benefit for those children they have brought with them and numerous others they claim to have left behind.

I OBJECT to paying tax for Child Benefit to be paid to foreigners, when British families are being told they must lose out because the country cannot afford it.

It is time to put British families first.