Sunday 25 April 2010

Office parties and bicycles? How Cameron lost faith in his marriage tax break

Those retaining a memory longer than that of a goldfish may hazily recall that the whole point of the Conservatives' proposal to "recognise marriage" in the tax system is to send a clear message about why marriage matters.

I’ve always said, this is more about the message than the money”, said David Cameron, responding to criticism that £3 a week would't make any difference.

So can anybody explain his increasingly bizarre analogies with which the Tory leader is telling the public that government tax breaks aren't really saying anything at all?

On BBC's election call on Friday, he was challenged by a caller who said this would discriminate against other types of family and that, as a man who was not married, it would make him feel like a "small person".

Cameron noted that:

There's a tax relief for having an office party, but I don't think that penalises people who choose not to have one.

Now he tells The Observer that nobody is losing out:

"Well, you're giving a tax advantage to marriage because marriage is a good institution. There is tax relief in our system for taking a bicycle to work. Are we discriminating against non-bicycle riders?" After this rather bizarre comparison, he gets back on track, arguing that it is "a very progressive policy" because the £3 a week will go only to people on basic rate tax with a low- or non-earning spouse.

That's an odd defence of a proposal to give £150 to a married couple with one-earner on £35,000, while excluding a married couple earning £15,000 each unless one of them gives up work (to earn under £7000).

Surely this can't be the same man?

"I absolutely feel at my very core that recognising that relationships matter, that commitment matters and, yes, that marriage matters is something we should not say quietly but something we should say loudly and proudly.

And to those who say that somehow supporting marriage is wrong let me take them on directly, let me fight back against this sense that we shouldn’t speak up for marriage .. Frankly I don’t care whether it is popular or not, I care whether it is right or not ... Why are we so frightened of standing up and saying what we believe in?

Cameron-watcher and ally Matthew d'Ancona has written:

David Cameron has an “irreducible core” of beliefs: convictions so close to his heart that they are non-negotiable. And none is more deeply-felt than his faith in marriage as the cornerstone of society.

So watch out if he ever has to defend a policy he doesn't fundamentally believe in.


The "flagship" policy has turned into a car crash. JK Rowling has memorably slammed it as unfair: for her, it sums up the "same old Tories" charge, in discriminating against single mothers, as well as the widowed and divorced.

But the Tories were looking to pick that fight. What might concern them more is how badly their policy does what it said it would do on the tin - rewarding and recognising marriage in the tax system, to reflect the evidence that this is good for children and society generally:

* The IFS have shown that only three out of ten 4 million out of 12.3 million married couples qualify;
* The IFS have also shown that the evidence on child outcomes doesn't stand up, because the outcomes from marriage largely reflect the characteristics of those who choose to get married.
* Two-thirds of those who receive the tax break don't have dependent children anyway; only one in five families with children qualify.
* It would be more accurately called not a marriage tax break, but a "stay at home" tax break, as it discriminates against married couples where wives go out to work.
* Civil partnered couples are even less likely than other married couples to qualify. It would be quite difficult to find many civil partnered couples who do qualify, making their much trumpeted inclusion mainly symbolic.
* And, despite all the flak, traditionalists are disappointed by its meagre scale, and believe the Conservatives have bottled out of the pro-marriage commitment.

David Cameron seemed unable to offer any coherent defence of the policy design in his interview with Jeremy Paxman, misleadingly trying to imply that it does not exclde two-earner couples (because it allows the second earner to earn up to £6500 per year and still qualify).

At 19 minutes 45 seconds

Paxman: One of the tax breaks you propose is marriage. You propose about three pounds a week being given to people who decide to get married, to a particular pattern of marriage. Now, obviously you don't believe that £3 a week is going to make feckless person who isn't going to get married to get married, but its to encourage a particular kind of marriage, isn't it?

Cameron: what do you mean?

Paxman: It's only payable, is it not, when one member stays at home and look after the children?

Cameron: No, that's not right.

Paxman: So if both partners work, they would still get it?

Cameron: It depends what they are paid. Look, Let's rewind a bit and try and make the argument. The big argument here is that we should recognise marriage in the tax system.

Paxman: Why?

Cameron: Well, I think marriage is a good institution. I think we should encourage commitment. And so that's why we thought we should recognise marriage and civil partnerships. And then we thought, well, how best to do that, and that's why we have targetted this tax change on the relatively low paid and said that's its a transferable tax allowance between husband and wife.

So you could for instance have an example of a two people both working but one earning less than the income tax threshold who could transfer a bit of that unused threshold to the other person in the marriage. That seems to me very sensible. We are recognising marriage. We are helping people who are relatively low earners. And we are helping them have greater flexibility and choice in their lives.

Paxman: But it will incentivise people in relationships where one of them stays at home, assuming they both pay tax, assuming one of them pays tax.

Cameron: Well, what it will be is that if they both earn below the threshold{*}, or rather if one earns below the threshold and one above, they can transfer. If one of them stays at home, they can transfer. Its a small element of transferability in the tax system which I think we should encourage.

Paxman: Do you think more married people should stay at home?

Cameron: I am not giving anyone a lecture to anyone in how to live their life. I think we should support people in the choices that they make"

Well, support some of them in some choices anyway.

{* this was a mistake: two earners under the threshold can not gain anything}


Seema Malhotra said...

Great analysis. Such an unclear policy. You dont need to spend half a billion pounds on an ineffective tax break to tell the British people what you think about marriage. Also - still no response from the Tories about why marriage rates dropped 25% from 1981-1997 - see my piece on left foot forward -

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