One area in which transparency is somewhat lacking is in relation to terminology. A tax credit – a real one – is paid by someone’s employer or the tax authorities and is specified by a monetary value and a withdrawal rate. Someone with no earnings receives the total monetary value of the tax credit. As their earnings rise less of the tax credit is paid until it is totally withdrawn (at the break-even point). As earnings rise beyond the break-even point income tax is deducted. The employer then deducts the tax credits paid out before paying their employees’ income tax to the Government.
What the UK Government calls ‘Working Tax Credit’ is not a tax credit. It is a means-tested benefit. ‘Universal Credit’ isn’t a tax credit and it isn’t universal.
The Chancellor’s July 2015 Budget Statement gave to us a new misnaming. Since its early involvement in the UK’s Living Wage campaign, the Living Wage Foundation has defined a Living Wage as the hourly wage required to provide a minimum standard of living. The current national rate is £7.85 per hour, and the rate for London (calculated separately by the Greater London Authority) is £9.15 per hour. [note]http://www.livingwage.org.uk/calculation[/note] But the Chancellor has now used the ‘Living Wage’ terminology to describe a National Minimum Wage of £7.20 per hour. His ‘National Living Wage’ will rise to £9 per hour by 2020. [note]http://www.gov.uk/government/speeches/chancellor-george-osbornes-summer-budget-2015-speech[/note] This looks very different from a Living Wage as that has previously been understood. Not only has the Chancellor misnamed his own enhanced National Minimum Wage, [note]http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414323/facts.pdf[/note] but he has deprived the Living Wage campaign of its own terminology.
Let us be clear: a Citizen’s Income, or a Basic Income, is an unconditional, nonwithdrawable income for every individual as a right of citizenship. It would be paid at the same rate to every individual of the same age, and it would never be reduced as other income rose. We would be grateful if the Chancellor of the Exchequer would be careful not to use the terminology to refer to anything else.