Thursday, 29 April 2010

Tax Credits




One of Mrs Duffy's questions yesterday has motivated me to write this post. She said she didn't receive help from the government [taxpayer] because didn't qualify for pension tax credit, owing to having her pension enhanced by a small pension transferred from that of her dead husband.

The PM suggested she try again, to which she implied she'd made several attempts but to no avail. His final comment was, "Try again." Does he know the procedure?

There must be a thousands of civil servants who deal only with pension tax credit. The government website suggests you may want to apply online and when you do and receive a maybe, they send you a lengthy form to complete which requires you to either pay a notary here in Scotland to swear an affidavit, or have the staff in your local job centre, will for free, photocopy your bank statements and any other papers you have regarding savings.

I stupidly took my application and savings documents to my job centre. I say stupidly with hindsight. My documents were removed from my possession and taken out of my range of sight, even though I suggested I'd prefer to be present when they were photocopied.

Don't be thinking popping into your local photocopying shop would be fine - it's not. The job centre staff have to sign and stamp the documents as well as photocopying them.

I regret the day I attempted to save money by going to my local job centre. For me, it felt like begging and a gross intrusion into a part of my life which is solely my business.

Of course I understand means testing is essential for tax credits but why have we reached the stage where so many people rely on them?

In my case, because Gordon Brown stole a chunk of my pension and I live on a very tight budget, I applied. Yes it said on the website. Then the form arrived and I duly completed it. Two months later, since I had had no response, I telephoned. "You earn £8.21 a week too much to qualify," was the decision. Why did that differ from the online questionnaire where it said I may be entitled. I can't remember the reply but it was obviously the standard one given to people who had the same query. We'll be on some database somewhere as 'being difficult pensioners'.

But this post isn't just about pension tax credits. It's about tax credits in general. Why are so many people, in a rich country such as the UK, having to rely on tax credits? There is child tax credit and working tax credit along side the humiliating pension tax credit. (I have no experience of the other two).

Doing my research I noticed there is a child tax credit available to those who earn up to £50,000. People can get 80p for every £1 they pay out in childcare costs. This is limited to £175 a week for one child and £300 for two or more children. This means the most that can be received for the childcare element of working tax credit is £140.

Now, I have no problem with helping parents who want/need to work and have fallen on unfortunate times or are unable to earn a reasonable living wage, but to pay this to parents who earn up to £50,000? Is it this tax credit which encouraged the younger generation to buy homes out with their income? Of course it was. They knew, in many cases the state would give aid.

Our benefits system came into being to help those who had fallen on hard times or were far less fortunate that most of us.

Now this government has created a benefit dependancy generation. What can we do about it?

Stop paying tax credits to those who earn, what I consider, is a very decent wage.

Stop taxing pensioners who earn less than £10,000 a year net. We don't want to apply for credits.

Labour have created a culture which feels no humiliation or embarrassment at asking for help from the taxpaying population. Too often I hear the words ' tax credits' in the present general election campaign.

Have labour no shame in suggesting people subsidise their income with tax credits when, as I said initially, we are what is classed a rich country?

Thanks to my loyal reader Surreptitious Evil for the legible graphic. Much appreciated.


22 comments:

Fitaloon said...

I think you need to vote Tory, it's iin the manifesto

INCOMING!!!!!!! said...

SR two points, it doesn't matter what the excuse they want you dependent in some way so that you are vulnerable to implied blackmail and coercion. Secondly this fact tells you that the basis of our economics is corrupted and criminal.

Note that what was an income tax related activity when there were real jobs around is now a revenue raising racket now that we are satraps.

subrosa said...

Me vote tory here FL? With that chancer Lyburn standing? No way. I'm happy with Pete Wishart. He doesn't insult the Chamber of Commerce or any businesses.

subrosa said...

Two excellent points Incoming and I agree with them.

What a pathetic country we are now. Fortunately I can remember the days when people were too proud to accept handouts unless they were utterly desperate. There are still some of my generation who feel that way, but we'll soon be gone. Then the social engineering project will have succeeded. State reliance - totally.

Was just listening to some student asking Nick Clegg where the jobs are. Do these youngsters think jobs are waiting for their wonderful skills? There's so much they can do to find jobs but of course they won't want to leave 'home', or set up in business themselves. They're indoctrinated not to think out of the box.

So much for today's education.

Surreptitious Evil said...

Why stop taxing pensioners? Why not just stop taxing everybody who earns the minimum wage or less? So, for a 40hr week that's currently just north of £12k p.a.

Then bin NI and roll it in to income tax. Up the higher rate to make it fiscally neutral.

Then start on the tax incentives - if it cannot be justified by social policy (i.e. capital gains relief on main house sales - otherwise people would have problems moving - and on family farms / companies - or whatever rocks your particular political boat), can it. That will allow you to reduce the tax rates, as well as getting rid of armies of shysters such as tax accountants and collectors.

Uncle Marvo said...

Get rid of those 100 civil servants and give the money to the pensioners.

Simples!

Or vote anyone but New Labour.

subrosa said...

Quite right SE, although my point was that of the pension tax credit with which I have slight acquaintance.

Some excellent ideas there too. It's long past time our complex tax system was revoked and a sensible one put in its place.

subrosa said...

Pensioners don't want handouts Marvo, they just want to keep what they've earned in their lifetimes. With poor government many of us have lost out on endowment policies, had great lumps of our pensions stolen and now, on the little savings we do have, we receive little or no interest. That reduces the value of our savings.

The last thing I'd ever do is vote labour Marvo. They're completely incompetent with regard to our money.

Crinkly & Ragged Arsed Philosophers said...

The Tax Credit scheme whether for pensioners, families or disabled is a complete scam; exactly as it was designed to be.

The hurdles of entitlement are vague with discretionary flexibility built in that would defeat a Philadelphian lawyer; as it was meant to be.

While the discretionary aspect is denied by the tosspots who administer the system while they practice the stonewall reject tactic till the applicant loses the will to live.

Various quasi charities are supposed to help people through this labyrinth and while they claim many calls, few are chosen.

Of course politically the system is perfect, it exists in statute but not in practice so costs very little. What more could a devious incompetent government want?

Uncle Marvo said...

@Ragged:

"What more could a devious incompetent government want?"

a vote?

Fat chance. The cat's out of the bag.

Crinkly & Ragged Arsed Philosophers said...

Marvo - the cats never been in the bag.

They just wanted us to believe it was; and many still do.

Bucko said...

Tax credits. The government takes most of your hard earned wage in tax and then gives back just enough to live on in the form of credits. A perfect way to keep you voting for them because you are dependant on them.

My wife and I earn a combined wage of just under 30k. We are not "entitled" to tax credits because we dont have children.
I suppose us as the working childless couple are the ones that have to pay for the work shy with 10 kids that all need playstations.

Mrs Rigby said...

Taking tax = easy
Taking too much tax = easy

Repaying overpaid tax and/or tax credits = difficult, and needs lot of state employees and takes months and months. The state does not pay interest on overpayments, but charges interest on underpayments.

Bureaucracy = good.

Self-sufficiency & being in control of your own, earned, income = bad.

The 'state' believes it owns all money in the country, every penny, it doesn't matter where it comes from.

Failed to complete a planned post about this:-
http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/7625417/53000-tax-refund-for-fallen-son.html
"Checks might take three to four months to complete because public money is involved"
It was not 'public money', it refers to incorrectly charged Inheritance Tax.

BTS said...

I saw this blog earlier but couldn't offer any comment as I didn't know what tax credits are. So I did some googling and read some stuff and have come to the conclusion that now I'm just that little bit older and yet I still don't know what they are.

My best estimate is that they are a means to take one's money, bugger around for a bit and then give some of it back. Maybe. Am I close?

granny v said...

Few people realise that at the same time they brought in all these "Tax Credits", which are simply means tested benefits under another name, they brought in a law that allowed the DWP and other agencies the ability to spy on the bank accounts of ANY benefit claimant, without that claimants knowledge and without having to get a warrant first.

Those people who rail against "Benefit Scrounging Scum" fail to realise that they themselves are the very people they rail against.

This government takes your money with one hand and makes you grovel for a bit of it back with the other, then have the temerity to say they care about you.

All they want is the power to control and spy on you, and set everyone against everyone else.

Billy said...

Surreptitious Evil

Hear Hear to your comment above, what is the point of taxing people on low wages just to give them the money back as tax credits etc.

You don't get people out of poverty by putting them into poverty.

subrosa said...

That's how labour have done it. They were determined to socially engineering the people of this country and they've nearly managed.

I understand your feelings. Labour encourage people to have children, regardless of situations. Many do because they know the state will take care of them.

We're between a rock and a hard place these days about this. Nobody wants to see even one child suffer because of the lack of food or care, but the money goes to parents and not all parents spend it on their children.

subrosa said...

I saw that in the Telegraph Mrs R and was shocked. It's it appalling they can't give back money they've stolen? As I get older I become more and more angry about how Gordon Brown stole my pension - something I saved for over 30 years.

Key bored warrior. said...

Good article Rosie which mirrors my situation.

I have two small pension which means I attract 20% tax. A bloody liberty. One is a miltary pension and the other an occupational pension from 23 years with a company.

When I retired medically 10 years ago i did not have my Army pension so I claimed for disability, and had to jump through all the hoops you described. Including sitting in a waiting area that looked like a bloody cop shop front. And you were treated as criminal. I went in one day to hand in forms they wanted and went to the moron who was behind a security window at the door asking him to take the forms of me. He never even looked at me as he tapped on the glass to indicate a scribbled note saying he would not handle mail and you had to go in and wait in a queue to hand in froms. 26 minutes it took, I was shaking with rage. No letter box nothing. You are antagonised from the word go by jobsworth shits.

Then I got another job but eventually my medical problems meant I had to give it up. And went back to claim again. Only this time the local SS office had closed and all had to be done by phone. Which took 4 weeks with the help of my MP, reserved matter.

You are required to submitt a medical certificate evry three months. But after I had been to my MP I was imediately asked for another even though my last was 2 weeks old. Vindictive bastards.

As I was about to go on to the higher rate which would have meant a few quid a week more plus motability, I was called in to be examined by the DHSS quack who turned out to have reported lies about me. These people are given objectives to return as many as possible to the system again at the start. You then have to go through weeks of appeal process, and go through it all over again and again. For the few quid a week I was getting I could not suffer the indignity and stress so I have just given up.

There are proffesional skivers out there but not as many as they make you believe but evry one gets treated like shit.

You are right why the hell tax people who earn less than the living wage.

subrosa said...

Kind of BTS. I can only speak about pension tax credit and not the others because I've little knowledge of them.

Pension credit is when the bureaucrats think you don't earn enough to have a decent standard of living. The figure varies. Many women of my age don't get a full pension because they chose to pay the married woman's NI stamp through their working life. That meant they could be subsidised by their husband's pension.

Those like myself get a full pension because I paid 'full' stamp all my life.

The full pension given in the UK is the lowest in the wealthy countries of Europe. My friend in Germany receives over double the amount I do. Her living costs as similar these days, although fuel is cheaper for her.

They keep the basic pension lower than the 'livable' wage so then pensioners have to apply to government for help. I explained the humiliation of that.

You're kind of close aren't you?

subrosa said...

Granny V, good point. You're certainly not the only person to mention that. As I said I was uncomfortable taking my banking documents to them for photocopying and signing but lawyers charge £50 a go.

I'm sure if I reapplied now I'd be asked what happened to one small savings account I had. Of course the answer is pay the winter heating bill but I doubt if they would believe me.

Surreptitious Evil said...

Billy,

I think, from the politicians' point of view, it allows you to claim that you have met your manifesto pledges not to raise tax while still raising tax. of course, the hideously complicated system stealthily expands the power of the state, requires additional statist interference in the privacy of people all the way up to £50K pa (not just the 'benefits claimants' Granny V identified) and, of course, means that many people will not claim what you are owed.

I believe that the legal system should be sufficiently simple that the hypothetical 'man on the delayed Edinburgh tram system' should be able to understand whether something he is about to do is legal or illegal and the tax system sufficiently simple that anybody on PAYE should get no benefit (apart from freeing up a little of their time) from employing a tax accountant.

We have a welfare state set up to help people in poverty survive while they are there and help them out of that state. The Lloyd Georges and Anerin Bevans who set up the original system must be turning in their graves seeing the dependency culture that our modern politicians (of pretty much all stripes) have encouraged, while doing their best to deny benefits to those in actual hardship.

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