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treat yourself to a milky bar - is it time for a citizen's income?

In the recent Budget proposals, it was announced that children would get an extra £20 Child Tax Credit from April next year. The Chancellor highlighted that a third of a million families would get an average £35 a week more through tax credits. Given that nine in every ten families already qualify for tax credits, you could argue that’s good news. However, campaigners argue that amounts to an extra 38p a week to the three million children living in poverty – this was more a “milky bar budget” for them than a “people’s budget”…

So should we campaign for an even greater increase in tax credits then or would more of the same still prevent families climbing out of the poverty black hole?

We know that although financial equality doesn’t directly guarantee social equality, income inequality certainly aggravates other inequalities we face as The Spirit Level demonstrates. Despite the increase in tax credits, the proportion of wealth has fallen for the majority of us as much as it has risen for the richest 10% since the earlier 90s.

Up until now, the government has focused much more on opportunity much more than equality – it even has a name for it - “social mobility” and the most visible example of this is their approach to “getting people back into work”. The paradox though for the people that take this up is that they fall into a trap – they lose most of their benefits – housing & council tax as well as job seekers allowance while the rate of deduction of their tax rates rises significantly. This obviously discourages people from trying to get back into work, as well as the practical difficulties of being able to afford to get to job interviews or even broadband to search for jobs.

How will they be able to pay for the bills at the end of the month, not knowing how many hours their recruitment agency will give them to work and facing a sharp decrease in tax credits that takes place when you get a job?

Those who suffer the most are families with children – they experience marginal deduction rates of over 60%. The only benefit which reduces child poverty and does not contribute to deduction rates is Child Benefit. On the other hand, those benefits which increase the likelihood of entering a “poverty trap” are Working or Child Tax Credits. The difference between child benefit and tax credits is that the former is paid unconditionally and the latter is means-tested. In these times of change we can believe in, we would normally look to Obama, but the US is so far behind in terms of social protection, that it doesn't make sense this time round to be inspired. What we surely need then are more unconditional and non-withdrawable and less means-tested benefits to tackle child poverty?

How about a citizen's income?

A “citizen’s income” pushes all these buttons, so should the government need to reduce tax credits to pay for a “basic citizen's income” to everyone or should it increase taxes for those who earn more or even introduce a maximum wage to pay a “living citizen's income”?

What are the overriding benefits of a citizen’s income?

The Citizen’s Income Trust argues that it’s unconditional, so it would also reduce the stigma attached to means-tested benefits. Its non-withrawable, so it would also reduce the stress attached to working out how much they would be left with at the end of the month. It’s redistributive as income is redistributed from people who are better off more towards those less so. Those who earn the least would get a quarter more in come than they currently do, while those who earn the most would only get a bit less. The rest of us would either get an increase in income or would stay in the same position as we are now. It's empowering as it would also encourage more flexible working, lifelong learning and retraining which is so important at the moment.

A survey amongst MPs shows that there is support expressed right across the political spectrum that everyone would gain from getting a “citizen's income”. If we don’t want to turn back on our pledge to reduce child poverty by half by next year, we need to do better than the “milky bar budget” we got a few days ago. Isn’t it time for a citizen’s income?

Thanks to Cliph for the photo published under Creative Commons


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