“Recognising marriage in the tax system is something I feel very strongly about and something we will definitely do in the next parliament. We will set out exactly how in due course,” was Cameron’s conclusion to a day of confusion, when he had earlier said: “It is something we want to do, something we believe we can do, it’s something, within a parliament, I’ll definitely hope to do. I am not today able to make that promise because we face this vast budget deficit – it is a clear and present danger to our economy. The public understand we cannot make all these promises up front. I think that is a very straightforward and honest way of explaining it.”
Nobody should hold politicians to dogma: after all, do we want them to do the things which are best for the nation, or do we want to make them jump summersaults to uphold the letter of words spoken perhaps a year or five years before? However: Cameron’s dithering all came on the same day.
But what should we really be doing about marriage and the tax system? Shortly after returning to the UK after almost ten years working in Belgium for international Christian youth charity Operation Mobilisation (OM), my wife and I were hit with a double-whammy: Gordon Brown abolished MIRAS, which had just about made our mortgage affordable (OM was and is a voluntary organisation, that doesn’t pay salaries — you’re actually responsible to raise your own funds to be there), and also abolished the married person’s tax allowance. Instead, he put the money into working families tax-credits. As we don’t have children, we didn’t get any of that, and our income for a while dipped below the basics of mortgage and utility bills. Those were not comfortable days!
Did we deserve MIRAS and the married person’s allowance in the first place?
It’s fair to say that MIRAS, or ‘mortgage interest relief at source’ was a tax-break for people wealthy enough to be able to afford to buy their own homes. Although it was a struggle at the time, we’ve certainly benefited from the rising market since then. If we had been paying rent rather than mortgage, we would have had nothing to show for it all more than thirteen years later. From a strictly ethical point of view, it would be hard to make the case that we ‘deserved’ MIRAS, when there were people over the road who worked just as hard for less pay, and would end up with nothing to show for it.
Did we deserve a tax allowance for being married? I firmly believe that marriage is the back-bone of society, and that the life-chances of children from stable homes where both parents are married are better. This is a simple matter of statistical evidence, and all the indicators point in the same way. But those indicators point the same way whether or not there is a particular tax-break for married couples. On the one hand, is it not good to encourage marriage with a tax-break? On the other hand, why should we reward the people with extra money who will have better life-chances for themselves and their children, when we should really be investing in those who have poor life chances? Again, we should look to the evidence: there is nothing to indicate that marriage as an institution dipped as a result of withdrawing the married-person’s allowance, or that its original introduction made people more likely to marry. We could perhaps point to the disincentive to divorce which losing the allowance would mean. But divorce is vastly more costly than that, and the amount is insignificant. And, again, do we really want to penalise people who are trapped in abusive marriages by taking away money they rely on?
The real issue was that, whether we deserved it or not, we relied on it. The adjustment was painful, and could have been devastating.
Brown and Cameron need to be much more aware of the impact their pronouncements have on people who are at tipping points. Take £100 a month away from someone who earns £50,000, and they will dislike you for it, but they are unlikely to notice it much. Take £40 away from someone who earns £20,000, and who is teetering on the brink of paying for a mortgage taken out during the housing boom, and you may tip them over into serious difficulties. It is irrelevant to ask whether they deserve the money, and whether society should be rewarding the £50,000 people for their hard work and higher contribution in taxes. Government does not exist to pass judgement about how people live their lives, but to organise society so that all benefit.
Perhaps Cameron recognised a little of that today, which led him to rock to and fro on the issue.
But that’s another thing a true leader cannot afford to do: dithering by leaders leaves the land in chaos. Those who dither, simply, should not be leaders.