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Monday, June 22, 2015

Tories should consider tax rises on the wealthiest rather than further welfare cuts

The Guardian reports that David Cameron is to deliver his strongest hint yet that he intends to launch an assault on tax credits as part of his government's proposals to cut the welfare bill.

They say that he will make the comments in a speech in Runcorn this morning just weeks before George Osborne, the chancellor, sets out £12bn of welfare cuts, seeking to justify them in terms of both reducing the deficit and the need for further changes to incentivise work:

In his speech on “opportunity”, Cameron will say Britain needs to move from a “low-wage, high-tax, high-welfare society to a higher wage, lower tax, lower welfare society”.

“This is what I would call a merry-go-round,” he will say. “People working on the minimum wage having that money taxed by the government and then the government giving them the money back, and more, in welfare. Again, it’s dealing with the symptoms of the problem, topping up low pay rather than extending the drivers of opportunity.”

The potential impact of this approach to cutting the deficit for the working poor could be devastating. In-work poverty is a major problem in our society, whilst many families rely on help with childcare costs through working tax credits. Even then the maximum amount they can claim does not even cover part-time childcare costs. If families cannot afford childcare then they will be unable to work.

My view and that of the Liberal Democrats is that this cut in welfare is a step too far and that the Government should be looking to increase taxes on the wealthiest in our society as a major contribution to eradicating the deficit.
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