The government is threatening to cut child tax credits, a move which the Institute for Fiscal Studies says would take £1,400 per year from 3.7 million of the poorest families.
The Resolution Foundation point out that this is a piece of regressive taxation. It would mostly affect the poorest 30% of households and leave the richest 40% almost entirely untouched. But the Conservatives are selling this move — surreally — as a means of raising wages.
In a speech on Monday 22 June Cameron green lighted the move, saying he promised to end “complacency in how we approach the issue of low pay”. Like a sanctimonious lifeguard lecturing a drowning man, Cameron complained that tax credits are only “dealing with the symptoms of the problem — topping up low pay rather than extending the drivers of opportunity.”
How anyone could imagine that taking £1,400 from millions of the worst-off would “extend the drivers of opportunity” is baffling. Or, as the Financial Times puts it, “David Cameron wants wage rises to replace benefits: researchers say there is no clear evidence that employers will make up lost tax credits”
Cameron certainly offered no explanation in his speech. He described the tax credit system as “a merry-go-round”, which only deepened the mystery.
Solidarity is also in favour of “ending complacency in how we approach the issue of low pay”.
Unlike Cameron, whose plan to do that involves robbing the poorest parents and children, we believe the way to do that is to take from the richest instead: to tax the rich, expropriate the banks and introduce a much higher minimum wage.