The lefties are over-egging the “Granny Tax”

A recent UKIP press release contrasted the withdrawal of the pensioner’s tax allowance, which may increase the Treasury’s revenue by up to £3.5 billion, with the shocking increase of £1.8 billion to the UK’s EU contributions since last November.

And rightly so.  It is outrageous that we indiscriminately throw more billions at dysfunctional and unaccountable European institutions (and indeed at foreign aid), while pensioners and hard-working families at home feel the pressure of austerity.  Leaving the EU would relieve the UK’s fiscal pressure, and dramatically enhance our economy, both by stopping our EU budget contributions and by freeing industry from the dead hand of Brussels regulation.

Nonetheless (and despite my enthusiasm as a new member of UKIP to criticise this Tory-led Coalition), I feel that some of the hysterical and vitriolic media attacks on the so-called Granny-Tax are a little contrived and over-egged.  For a start, it’s not a tax — it’s merely bringing the tax allowance of older people into line with that of working-age people.  We hear complaints about ageism — this removes an example of age discrimination.

We are told that many of those older people who are entitled to the higher personal allowance don’t even take advantage of it, so it won’t affect them.  For those who do use it, the effect is mitigated by the substantial rise in the general personal allowance, and further mitigated by increases in pension levels already in the pipeline.  And it’s not immediate — it will be phased in over time.

Suggestions in the left-wing media that “pensioners have been raided to pay for tax breaks for the rich” is particularly pernicious.  The so-called tax break for the rich — the half-hearted cut in the 50% tax rate to 45% — will cost the Treasury very little in the short term, and by promoting growth will increase revenues in the medium term.  There is nothing there that could be “paid for by pensioners”, and the left’s line is a cruel and cynical deception.  It is whipping up misplaced anxiety amongst older people.

The Institute of Fiscal Studies points out that the main pressure of austerity falls on younger working people and parents, with the elderly bearing only a tiny fraction of the burden.  In this context it’s worth noting today’s news that the Revenue is planning a crack-down on families with nannies who pay the nannies cash-in-hand to avoid tax.  It seems only months ago that Conservatives were suggesting that the cost of child-care should be tax-deductible, with the express objective of helping highly-qualified young mothers get back into the work-force (and providing employment in child-care for possibly less-well-qualified young women).

That policy would have been a win-win in terms of employment, and in terms of maximising the economic contribution of mothers who might otherwise have to stay at home.  The newly announced crack-down on nannies is a sad reflection of the way reality falls short of aspiration.

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4 Responses to The lefties are over-egging the “Granny Tax”

  1. Maureen Gannon says:

    Roger we only ever get to know what they want us to hear everyone is up in arms about the pensioners tax grab, not a mention anywhere about an EU directive vat on hot food slipped into our domestic budget without a murmur from everyone in the house are they all quislings?

  2. Sarah says:

    There was an encouraging bit in the FT about how the Granny Tax was sensible. Don’t often get stuff like that in the FT.

  3. The government haven’t given the rich anything. It’s their money in the first place. All the gopvernment has done is let them keep it. They have merely frozen the tax allowance but the state pension is due to rise.

  4. Anton York says:

    I lost some of my 65+ allowance last year because I got too much pension; my private pension plus state pension took me over the circa £24K limit. The trouble is Roger that in our world that pension covers two people. The wife with a private or even full state pension of her own is mainly still to come to pass. So, as a couple, my wife’s personal allowance is mainly unused, but I loose some allowance, ‘cos I get too much. It’s the same smoke and mirrors with income tax.
    If I walked away from my marriage though (never will) the state suddenly demands that I recognise reality and share my income equally with her because it is (rightly) considered to be hers too.

    All that apart, I am not objecting to bearing my share of the painful debt left by dodgy ivory-tower politicians and personally greedy bankers in order to put things right.
    But why is no one in jail?
    This almost unbelievable amount of damage to our country must be considered treason don’t you think?

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