Today (16 January) MPs will use a Westminster Hall debate to urge the Government to make the tax-system fairer for families by reducing the crippling tax burden families’ face.

They will be highlighting new research from the Strengthening Families report: Making Work Pay for Low Income Families Inquiry Report. The report shows work simply does not pay for many families in the bottom half of the income distribution and high effective marginal tax rates make it almost impossible for some families to escape poverty.

In fact, the report found that families are paying out thousands of pounds in income tax and then have to be helped financially via the Government in the form of benefits.

The report argues that a large part of the solution to this would be to properly recognise family responsibility in the British tax system.

CARE’s latest annual tax report reported echoed these findings that Britain has one of the most anti-family tax systems in the developed world:

• Tax burden on one-earner married families with two children 30 per cent greater than the OECD average.
• Struggling families face highest effective marginal tax rate in western world
• Income tax burden 85 per cent more than a comparable French family, more than twice as much as a comparable US family and 11 times as much as that on a comparable German family.

The latest figures from The Office of National Statistics (ONS) show that stay-at-home spouses contribute thousands of pounds a year to the economy. But their worth is omitted from the tax system, with the marriage tax allowance sitting at a pitiful 10 per cent.

CARE’s Chief Executive Nola Leach said:

“We welcome this report which engages with a really important issue largely ignored by policy makers for years.

“The fact that the UK has the highest EMTRs in the developed world should be a source of shame for the Government which happily talks about its commitment to helping make work pay.

“Our current tax system is anti-family and leaves low-income families especially suffocating under absurdly high effective marginal tax rates.

“CARE’s own research has consistently highlighted the way in which high marginal tax rates trap families in poverty and stifle aspiration as well.

“It is surely inconsistent for a Conservative Government to leave this burning social injustice unaddressed.

“While we welcome the fact that a marriage tax break was reintroduced in April 2015, it is too small to make any meaningful difference.

“Strong families are the bedrock of a strong society and it is critical that the Government engages with this report and commits to investigating all options to reduce the marginal tax rates which in turn will help families across the UK.”

Ends

For all press inquiries please contact Rachael Adams on 020 7227 4708 / 07851 153693 or Rachael.adams@care.org.uk

The Strengthening Families Report: making work pay for low income families inquiry report. (link will be added when report is published online).

The Strengthening Families manifesto

For many years, CARE has been at the forefront of research on how families fare in the UK tax and benefits system, both domestically and internationally. Click here to read our latest reports on this.

The Taxation of Families Report – International Comparisons 2017 – CARE Report

ONS figures reveal massive economic value of stay-at-home spouses - CARE

David Burrowes, former MP for Enfield Southgate and Executive Director of Strengthening Families Manifesto said, “Our anti-family tax system is out of step with the needs of British families, and out of step with the developed world. The high marginal tax rate is an attack on aspiration, and its impact upon low income families is a grave social injustice which demands the attention of all Conservatives. It should therefore come as no surprise that 60 Conservative MPs signed up to the Strengthening Families Manifesto want to take action, leading to this inquiry into making work pay for low income families. And no surprise that in response to the inquiry’s findings 20 Conservative MPs tabled an amendment to the Finance Bill calling for a review by the Government to analyse why many families in the UK face such high effective marginal tax rates and identify the options for reducing these rates. What is a surprise is that over 8 years of a Conservative led Government have failed to share the burden of recognising family responsibility more equally between the benefits system and the tax system. Rather than making it easy for families to aspire to increase their incomes, UK fiscal arrangements are effectively suffocating social mobility and trapping families in poverty.