The Conservatives again support marriage in the tax system. Any proposal will penalise a number of groups, be regressive, and fail to provide more stable homes.
After much to-ing and fro-ing yesterday, the Conservative party has once again committed to supporting marriage in the tax system. But any proposal will penalise a number of groups, is likely to be regressive, and will fail to provide more stable homes.
As widely reported in this morning’s papers, David Cameron yesterday flip-flopped on his marriage tax plans, first saying “It is something … I’ll definitely hope to do” before later saying “we will definitely do [it] in the next parliament.” On Today this morning, Conservative Home’s Tim Montgomerie confirmed: “What we have is a definite commitment to recognise marriage in the tax system” although it won’t be the expensive £4.9 billion policy originally proposed by Iain Duncan Smith in 2007.
But whichever policy the Conservatives finally adopt will favour old over young. In 1991, 74 per cent of 30-44 year olds were married but the Office of National Statistics projects that only 43 per cent of the age group will be married by 2021 (Table 3a). For the overall population aged over 16, the proportion of married couples is projected to fall from 58 per cent in 1991 to 41 per cent by 2031, as the Chart below shows.
Tim Horton of the Fabian Society told Left Foot Forward,
“When we last had a married couples allowance under the Tories during the 1980s and 1990s there was actually a drop off in marriage. There is little evidence that tax breaks would make much difference. And even if some couples did get together for a tax break it is unlikely their relationships would be as robust as those motivated by love and commitment, which is what actually explains positive outcomes for many married couples.
“What’s more, the Tories’ proposed tax break would unfairly ignore many families, including cohabiting couples, single parents and the low paid. It would also fail to support many younger couples, who often use cohabitation as a ‘practice run’ for marriage.”
The number of cohabiting couples are projected to rise from 2.25 million in 2007 to 3.70 million in 2031. This blog has previously shown that the proportion of households with single parents has risen from 3 per cent in 1971 to 7 per cent in 2008. Marriage is also more common further up the income scale as this analysis of IDS’ proposals has shown.
Giles Wilkes also has an excellent piece on his Freethinking Economist blog outlining why the Tories are “on the back foot on marriage”
And Chris Giles of the FT has just posted on how “transferable tax allowances are a terrible idea” and that “It wasn’t nutty progressives who got rid of the married man’s allowance and undermined the married couples’ allowance in the tax system. It was a combination of those awful lefties (Nigel Lawson, John Major, Norman Lamont and Kenneth Clarke)”.
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