As published in the Daily Mail:
End the Tax Bias on Stay at Home Mums says Davis
George Osborne should promise large-scale and costly new tax breaks for married couples, a senior Tory said yesterday.
The Chancellor should commit to a transferable tax allowance for married people worth the whole of their £10,500 income tax-free allowance, former Party chairman David Davis said.
This would give vital support to marriage and the family and bring help to stay-at-home mothers.
Next year the Chancellor must use his final Budget of this Parliament to rebalance the tax system and remove the bias against families’, he said.
The importance of marriage and family to our children’s well-being needs to be recognised,’ he added.
The call by Mr Davis – beaten by Mr Cameron in the 2005 Tory leadership election – is his second challenge in a week. It follows his demand that the Prime Minister open talks with Brussels on Britain’s exit from the EU.
Tax support for married families and full-time mothers has been a regular theme on the Tory right and some MPs are unhappy Mr Cameron has done no more than offer a transferable tax allowance worth less than £200 to some married couples.
Under that tax break, which will apply from April next year and help only basic-rate taxpayers, couples will be able to transfer £1,000 of their tax-free allowance to their partner.
Mr Davis’s more sweeping proposal would apply to all married people, including those earning over the higher-rate tax threshold of £41,865.
It would mean a husband whose wife was looking after children and transferred her tax allowance to him would be able to earn £21,000 before having to pay any income tax at all. Mr Davis said that in 1990, when the system was changed to tax people as individuals rather than as families, the intention had been that those who did not use their tax-free allowance should be able to transfer it to their spouse. But the transferable allowance had never been introduced.
Since then the threshold for paying tax has risen for single people with no responsibilities but hardly changed for families, Mr Davis said.
Writing on the Conservative Woman website, he added: The bias against single-earner families is particularly severe.’ Despite evidence marriage underpins more stable families the Government offers them no support, he said. In some cases a family can grow its income from £12,000 a year to £20,000, but have little more money to spend. This produces a disincentive to aspiration,’ Mr Davis said.
The Conservatives should pledge to increase the transferable amount until the entire tax-free allowance, raised to £10,500 in the last Budget, is transferable, as should have happened when the taxation system was changed almost a quarter of a century ago.’
He said this would be expensive but should become a long-term aim. When the personal allowance is fully transferable the state will be truly neutral on family decisions about whether parents go out to work,’ he said.