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Wednesday
Aug182010

Could Negative Income Tax be the Answer to Overhauling the Benefits System?

We have heard a lot recently about the state of the economy and the huge national debt.  The new coalition government is set to do all it can to reduce the outgoings of the country in order to bring down this debt.  One of the areas it is looking at currently concerns the state of the benefits system.

I have long been of the opinion that the system needs a good shake up, and this seems to be what the new government has in mind as well.  Unemployed people may soon be saying goodbye to their benefits if the new ideas are pushed through.  Instead they will be getting used to a system which has been called the ‘negative income tax’ system.

A regular rebate would be granted to those people who are eligible for it.  Over time as they return to work the rebate would decrease until they are earning money in a regular manner.

Other benefits and tax credits are also set to be swept aside in the new plans.  I was pleased to see however that those with genuine disabilities and pensioners will be untouched by these new plans.

It will be interesting to see how this goes ahead.  Clearly there is a real need for the current system to be radically changed.  It is very complicated and hard to understand at present, and some people are indeed better off claiming benefits than going to work.  This is precisely the kind of situation that the present government wants to bring to an end.

If you have any concerns about your financial situation with regard to tax credits or your tax liability, you can talk to us here at St Matthew now in complete confidentiality.

 

 



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