Transparency

In his July 2015 budget statement, the Chancellor of the Exchequer, George Osborne, promised to increase the Income Tax Personal Allowance to £12,500 and the Higher Rate Threshold to £50,000 by 2020. [note]www.gov.uk/government/speeches/chancellor-george-osbornes-summer-budget-2015-speech[/note] What he did not tell us was the effect. As the Institute of Fiscal Studies explains:

Tax and benefit changes are likely to act to increase inequality over the course of the current parliament. The gains from the Conservative plans to increase the income tax personal allowance to £12,500 and the higher-rate threshold to £50,000 by 2020 would be concentrated in the top half of the income distribution, with those in the 9th income decile (between the 80th and 90th percentiles) gaining the most as a proportion of income. [note]www.ifs.org.uk/publications/7878, p 41[/note]

The problem with personal tax allowances, other tax allowances, National Insurance Contribution rates and earnings limits, etc., is that the effects of changing them are not always obvious.

A Citizen’s Income would behave very differently. If a particular age group’s Citizen’s Income were to rise by £x per week, then every week each citizen in that age group would receive an extra £x into their bank account. Anyone still on the residual means-tested benefits that some Citizen’s Income schemes might require could lose means-tested benefits because of the increase in their other income, but that would be the fault of the means-tested benefits and not of the rise in their Citizen’s Income – and the rise in Citizen’s Income would in any case bring them closer to coming off means-tested benefits altogether.

A further virtue of a Citizen’s Income is that everybody would be treated in the same way. No longer would the Institute for Fiscal Studies be able to say that members of one income decile would benefit more than those in another. Whichever income decile you were in, your Citizen’s Income would rise by £x per week, and you would receive an additional £x into your bank account.

Governments are not renowned for seeking transparency when it comes to the tax and benefits systems: but it ought to be a virtue to aspire to. A good place to start would be to implement a Citizen’s Income in place of personal tax allowances and large parts of the benefits system. A Citizen’s Income would be an income for every citizen. Greater transparency could not be possible.

Footnotes