• Nick Clegg appears to be demanding that the Government moves much faster in its stated desire to bring in a tax free allowance of £10,000 per annum.
I have never understood and nobody has ever explained to me effectively how the Treasury can justify taxing somebody who is on the minimum wage.
It stands to reason that if one accepts the concept of a minimum wage then its justification must be to set it at the level that an individual over 21 needs to earn £6.08 per hour in order to live a half decent life. That is £12,646 per year on a 40 hour week. Not a great deal of money, and an amount that’s purchasing power is decreasing due to inflation, but a liveable wage according to the Low Pay Commission.
Clegg is calling for the first £10,000 of this to be tax free. This leaves the basic question, how and why does he think it is justified to tax those on such low wages that they are accorded minimum wages? It just doesn't make economic sense, due to the costs involved in administrating the system, nor does it make moral sense in that the Government is giving with one hand and taking away with the other. Either cut the minimum wage, or stop taxing the poorest working people.
UKIP's policy has been clear on this for years, but our thinking goes beyond that. We believe in a huge simplification of the tax system as it stands. One of the memorable aspects of the expenses scandal was that the then Chancellor, Alastair Darling, charged the taxpayer for advice on how to pay his taxes. If he didn't know how to sort out his tax affairs, then what chance do ordinary people have?
Party of our simplification would be to merge National Insurance and Income Tax. This would allow for greater transparency and honesty in the system. Never again could a Government boast about keeping Income Tax down and then stealthily raise NI by a penny in the pound.
At the last election we opted to merge 20% basic income tax with 11% national insurance to create a 31% flat tax on all earned incomes over the minimum wage.
This of course would mean that the economically useless tax rates on the most successful would also be stripped away, encouraging entrepreneurship and boosting growth and creating jobs.
We believe that what used to be called the transferable married tax allowance should be reinstated, but not only to those who are married, but to all in a legally recognised partnership. This would mean that families were not discriminated against by the tax system. It would also free people up to make work/life balance choices that today are currently beyond them. People could choose to bring up their children themselves, if they so desired, without such fear of penury.
And for employers we would to abolish employers’ national insurance across the duration of a parliament to end the tax on jobs. This will undoubtedly boost employment and simplify the process of employing people.
So yes Nick, by all means push for a £10,000 tax allowance, but don't stop there. If you really want to release the potential of the British people, then set them free. Let them be the drivers of economic growth achievement - they will be happy to take up the challenge, but you have to at least give them the chance.