Child Benefit: Tax Benefits to Tackle Poverty?

The tax could lift 350,000 children from poverty

The tax could lift 350,000 children from poverty

The Institute for Public Policy Research (IPPR), a socio-economic think tank, has released plans to tackle the issue of child poverty through taxing the universal child benefit.

With the money garnered from child benefit taxes, the think tank says the government could increase payments to those who need it most, Britain’s poorest families.

Deliverance from poverty

Research from the IPPR suggests that the state should increase the child benefit to a flat rate of £22 per week. This is up from the current rate of £20.30 for the eldest child, with £13.40 per week for any subsequent children.

The Institute estimates that a move on this scale could lift over 350,000 children out of poverty.

The cost of helping these hundreds of thousands of young people out of poverty would amount to an extra £700 million a year, the think tank estimates. The figure would need to be added on top of the £12 billion the government spends yearly on child benefit spending.

However, the government has not let the child benefit and other family assistance programmes escape from the long arm of its austerity plan, and has introduced radical reforms specifically to cut the rate of taxpayer spending.

In order to pay for the mammoth costs of the well-intentioned reforms, the IPPR suggests that the benefit be reduced for those on higher incomes.

Families with a household income of £37,400 or more would receive a taxation of 40% on their weekly child benefit payments, which reduce their benefit value to £13.20 per week, per child.

Helping the vulnerable

The think tank has argued that the taxation approach to benefits is a more fair way of distributing government aid for children.

It is also more favourable to means-testing, the IPPR says, because the complex administration required would hinder the benefits of the change.

The research and recommendations from the IPPR are a timely reminder of the growing problem of child poverty in the UK.

In 2007-2008, over 2.9 million children were officially living in poverty.

Experts say that while taxing the child benefit would hurt some middle-income families, it would provide the poorest and most vulnerable in our society with help rather than cutbacks.

Since we are living in the Age of Austerity, taxes for the higher-earners may be the best option for addressing the growing wealth gap and lifting children from poverty.

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