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Simpler Tax and Benefits System thereby reducing benefit dependence

Comment 1st July 2010

The current benefit and tax system is too complicated, difficult to understand and hard to administer fairly. People fall into a poverty trap where they can't afford to work and this then requires an extra mechanism to pull them out.

In short the current system encourages dependence on the state.

Instead I propose a simpler system which is seen to be fair, can't be cheated and while being cheap to administer also encourages people to actually work. I wish to propose such a system which would result in the repealing of a large number of benefits-related laws (and crimes for that matter) and being replaced by a single new system.

This idea is fully described here:

http://experimentpolitics.blogspot.com/2010/04/fairer-benefits-system.html

Here's the summary:

Have a single payment paid to everyone whether employed or not. This would replace the tax-free allowance for tax payers. Adjust the higher tax bands to accomodate the new offset (which incidentally could have a similar effect as taking people who earn under £10,000 out of the tax system, in that they would pay no net tax).

Because the single payment is paid to *everyone* there is no level of employment (including unemployment) where it is not beneficial to earn more.

There would be no possibility to cheat the system, because you would be encouraged to work whenever you can (and therefore pay tax).

Note that this system could also include a replacement for disability allowances simply by increasing the standard payment for people who have different levels of disability.

I don't doubt that this system is rough around the edges but I believe it could form the template for a radical new way of making Britain much fairer.

Why does this matter?

Currently we have a situation where people on benefits are called "scroungers" by some. In the proposed system the benefit is universal, so nobody is more of a scrounger than anyone else. However in the proposed system people are encouraged to work and contribute to society, however much or little they are being paid. It is therefore "fair" in that respect.

The current system is very difficult to understand and people have a hard time working out what is actually due to them. In the proposed system it is very easy to work out what is due to you.

The current system discriminates against people who are able to work part time by cutting their benefit. In the proposed system people only need to work for as much as they need to.

This idea radically changes the way we see benefit. For those of us who are tax payers we are already receiving a "benefit" known as a tax-free allowance. For those of use who are not working, or not earning enough there are a myriad of other benefits which come into play, mainly because these are all tweaks that have been applied over time. This new system completely changes our relationship with tax and benefits.

I beleive it would save a lot of money in the short and longer term, in terms of

a) collection/admin overheads

b) overall benefits bill could be reduced significantly

c) would ease the burden on courts as no need to chase fraudulent claimants as there would be no such thing



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