Articles and Speeches

Tax and Benefit Torture
23-Jan-06, Crossbow Magazine Article.

Before entering frontline politics I spent more than a decade running businesses and I am now convinced more than ever before that simplicity is a cure for many evils.

It strikes me that when a task is perceived to be complicated we often tend to avoid it. This is partly because it is difficult to estimate how long the task may take, especially when we have so many other demands on our time. The longer we procrastinate, the greater the level of stress we feel as the deadline looms and the potential onerous consequences of further delay edge into view.

There is no clearer example of unnecessary complexity than the UK tax and benefits system.

Now I want you to be honest. Do you really understand the combined effects of tax bands and thresholds, tax credits, NI thresholds, allowances, pensions and the multitude of means tested benefits?

If you see an unopened envelope from the Inland Revenue on the door mat, how do you feel? If you are presented with a year end tax return, how do you feel?

Now imagine how you’d feel if you were elderly, suffering from depression or struggling with a learning difficulty or sight problem?

It seems to me that the complex systems and lengthy forms are tantamount to torture.

It is the less well off, the elderly, the most vulnerable and the least well educated who are most in need of benefits and unsurprisingly they are exactly the same groups who will find lengthy and complex forms the most stressful and difficult to complete.

When 1 in 10 of the British population suffers from dyslexia or similar learning challenges, it seems callous to expect that they understand one of the most complicated tax and benefits systems in the world.

Add to this the intrusive nature of the questions for pensioners who, having paid into the system for their entire working lives, are then forced to undergo means testing for anything above the miserly £85 a week.

Then consider the situation where someone earning just £9,000 a year is first taxed and then forced to complete several lengthy forms to claim tax credits to top up their income. Combined with chasing a claim through the defunct Child Support Agency and you have all the elements for horrendous levels of stress. It is no wonder that I get so many letters in my Constituency post-bag from people so desperate that hey are close to a breakdown in many cases.

It is an unacceptable situation with a relatively straight-forward solution.

By simply combining NI and Tax into a single income tax with the same thresholds, you would cut bureaucracy and complexity at a stroke.

By simply raising the tax-free thresholds so that nobody pays tax on a low income, you would lift millions of the lowest earners out of the benefits trap in an instant.

By simply increasing the basic State Pension you could lift millions of the poorest pensioners out of the means testing trap and the associated stress of intrusion into their personal affairs.

There are many good economic reasons for adopting a flat tax with an appropriately high tax free allowance and I am delighted that the Conservatives are open minded enough to consider this approach.

Imagine the day when someone earning £15,000 paid no income tax, filled no forms and could proudly announce that they were fully self-reliant rather than dependent on the state.

Imagine the day when a pensioner receives a decent pension of £500+ each month, pays no tax and never sees a form from the Inland Revenue or the local council.

Whilst it would be unwise to unravel our burdensome tax and benefits regime in one go, a significant increase in the tax-free income threshold for the least well off would be a good start. Over time, as average net incomes rise, the need for tax credits should subside and people would be freed from stress and intrusion.

Perhaps for social acceptability, a higher tax rate might be introduced for a transitional period for the highest earning 1% of the population who. I am sure they would be only too happy to have their tax affairs simplified and the overhead at the Inland Revenue pared back sharply in return.

With a simplified tax system with higher thresholds there would be no need for year end returns, no need for means tested benefits for 9 out of 10 pensioners and no need for forms for those with learning disabilities. Above all, I suspect we might be able to survive with 250,000 fewer bureaucrats creating stress and wasting so much of our leisure time. Roll on that day!

We must release the most vulnerable in our society from the torture of mental cruelty inflicted by the Chancellor through our so-called ‘welfare system’.

Notes. Adam Afriyie is MP for Windsor and puts forward some ‘personal thoughts and reflections’ on the stress and suffering caused to the most vulnerable in our society through the complexities of the tax and benefits system.