More than eight years after David Cameron first pledged to recognise marriage in the tax system, George Osborne will (to his great reluctance) finally announce details of the policy in his Autumn Statement on Thursday. Under the new system, basic rate taxpayers not using all of their personal allowance (which currently stands at £9,440) will be able to transfer up to £1,000 to their spouse or civil partner, reducing the latter’s tax bill by around £200.
After finally meeting his pledge, and appeasing Tory grumblers, one might have thought Cameron would quietly move on. But speaking to reporters in China, the PM has now revealed he wants to go further. He said: “It’s something I have long wanted to do, so I am pleased we will be achieving it. I believe in marriage, I believe marriage should be recognised in the tax system. I see this as yes, a start of something I would like to extend further.”
The allowance is, as I’ve written before, terrible policy. It will reduce work incentives by encouraging second earners to stay at home, further complicate the tax system and do little to support those families most in need of help. It’s also, as the socially liberal Osborne has recognised, bad politics.
In a GQ article earlier this year, Andy Coulson described the perception that the Tories frown upon single parents as “electoral halitosis”, but this policy unambiguously discriminates against them. Among those who also don’t gain from the policy, as the campaign group Don’t Judge My Family has noted, are widows and widowers, people who leave abusive relationships and working couples. Are liberal Conservatives really comfortable with tilting the tax system against them? The philanderer on his third marriage gains, while the hard-pressed single mother is ignored.
Before rushing to make tax breaks for marriage a defining part of the tax system, Cameron should pause to consider the political consequences. If he isn’t, his Chancellor certainly is.