Recognising marriage in the tax system, a policy which CARE supports, something that was in the 2010 General Election Conservative Party Manifesto and something which made it into the Coalition Agreement, was debated yesterday (July 18th 2011) in the House of Lords. This debate was part of the report stage of the Finance Bill in the Lords and it generated a lively discussion and a number of peers from different parties spoke in support of recognising marriage in the tax system. During the debate, peers drew attention to the fact that it has not yet been recognised and pressed the government for a response as to when they will begin making the necessary provisions in order to enact this measure.

Indeed, Lord Anderson of Swansea, spoke very favourably of the institution of the marriage, noting the many benefits it brings to society, ‘On average, children brought up in married families do better than those in single-parent families by every significant measure – of educational achievement, health and propensity to commit crime. Even after discounting certain socioeconomic factors such as age, income, education and race, the fact remains that the poorest 20 per cent of married couples are more stable than all but the richest 20 per cent of cohabiting couples.’

Given these well documented benefits, Lord Anderson implored the government to act on its commitment to recognise marriage in the tax system as soon as possible, particularly given that the UK is unique throughout the OECD in not recognising marriage in this way, with only 18 per cent of OECD citizens (excluding the UK) being subject to a tax system that does not recognise marriage in some way. ‘Therefore, with one moving in the wrong direction from the OECD average, surely it means that the issue is both important and urgent. Unless action is taken, the easy slogans of the Government about making the UK the most family-friendly country in Europe will appear ridiculous.’

In addition to Lord Anderson, Lord Browne of Belmont also contributed ably to the debate by highlighting the much higher than average tax burden married couples in the UK with children face in comparison to their OECD counterparts, ‘Indeed, if we look at the tax burden that they bear, it is a staggering 39 per cent greater than the OECD average. What really is concerning, however, is the fact that the latest projections suggest that the tax burden on such families will be more than 50 per cent greater than the OECD average by 2012-13 – unless, of course, there is an offsetting measure such as recognition of marriage in the tax system.’

Lord Mackay summarised these arguments by also encouraging the government to recognise marriage in the tax system and to make the necessary preparations as soon as possible, ‘From my point of view, the system is so damaging to the institution of marriage that the sooner it is done, the better. Therefore, rather than leave it to the very end of their commitment, it would be extremely wise and beneficial for the Government to do it soon. I hope that my noble friend can give us some encouragement that the Government intend to do just that.’

In response to these compelling arguments, Lord Sassoon, the Commercial Secretary for the Treasury said that ‘We are keen to send a clear message that family and marriage matter and that strong and healthy families help to create a strong and healthy society’, but that ‘It is not fiscally practical to introduce a transferable personal allowance for married couples at this stage. Having said that, our commitment remains clear.’

A link to the full debate on Hansard can be found here.

You can read and download CARE’s report on the Taxation of Families 2009/10 here.