Thursday, August 12, 2010

Luke Johnson wants to cut the fudge

Luke Johnson who writes regularly for the Financial Times, yesterday Beware the cost of hidden extras compared the way such businesses as a) building contracting firms, and b) budget airlines make their profits. They entice the punters in (a) with 'at-cost' tenders  and (b) with 50p air fares. In (a) with every variation on the contract and (b) every add-on possible for a flight they try to make the business pay.  Johnson says this undermines trust in business - people would rather know the true cost before they commit.

He says the trend was adopted by the Labour government who were notorious for dozens of new stealth taxes whilst keeping the basic headline income tax rates unchanged for years. Here the voters were confused but gradually learnt to trust politicians even less than they did before. 

The same trend  has happened in welfare payments, where, says the latest Citizen's Income Newsletter Issue 2 , 1.8 million pensioners do not claim Pension Credit due to 'the complexity of the claiming process and the stigma associated with being dependent on state benefit' .  The same CI letter refers to the universal availability of the NHS. No one seriously suggests in the UK that  the universal 'benefit' of NHS should be subject to means-testing, no one considers it a stigma to take the free NHS services, so why is the UK welfare benefit system so riddled with means-testing that makes it ineffective to many who really need its help? Far better, says the Citizen's Income Trust, to have a Universal Benefit in place of tax allowances - a Citizen's Income: 'A regular unconditional nonwithdrawable income paid to each individual citizen as a right of citizenship'.   If we did this, enabling a bonfire of the welfare benefits, a huge admin. saving would be made.  Clarity and simplicity wins (OK, Luke Johnson?), effectiveness wins - benefits would reach those needing them. Earned income  would be taxed leaving the better off without a change in their take home pay.  

Ian Duncan-Smith (welfare reformer) and Frank Field (reviewer of poverty) need to consider the Citizen's Income as a vital measure in a new, more effective and much simpler system.

Posted by Charles Bazlinton

No comments: