Because if tax and credits were abolished below the poverty line it would cause a business boom in cottage and low cost industries, like in India which is its main competitve advantage. The more tax and bureacracy that is added, the more uncompetitive the UK becomes. Also this change could boost the voluntary sector, and encourage such work with expense payments only, such as I do for the Governments community rail partnership, which has been the only real success of the last government as it involved all the community.
I started a business in property consultancy in late 2008 which was an awful time in the Industry. Business link were very useful, but I still had to register and pay National Insurance even whilst earning nothing! There are a host of regulations to compy with, and have to pay costs up front and claim back tax credits and allowances, but this costs vital time and money during which many business go bust. I am the only survivor in herts of my type of business because of late payments, and slow administration. tax credits were denied ebven though I was eligible, so don't waste time of this. It is ridiculous to tax businesses then have to claim back the same costs!