Our tax system should be changed to treat families more fairly

(Photo: Unsplash/RawPixel)

Today in Parliament, CARE is publishing its new report, which uniquely examines the way different OECD countries share out the tax burden on those with family responsibilities and those without. We've been doing reports on this specific issue since 2008. This year's The Taxation of Families – International Comparisons 2018 is our 12th and the findings have been astonishingly consistent.

The bottom line is that the UK gives families and especially one-earner married couples with children a rough ride in comparison to other OECD countries. So, with the Chancellor due to deliver his first Budget in a week's time on 11 March, we are calling for a complete review of the UK's income tax system. We do not think it is right that those with family responsibilities should face discrimination as is currently the case.

The latest findings highlight the injustice families are facing. The overall UK tax burden on a one-earner married couple with two children on the OECD average wage for the UK is 28% greater than the rest of the OECD. It is the same for a single parent with two children. By contrast, someone without any family responsibilities on the same wage fares a lot better. Their tax burden is 8% less than the OECD average.

When you look at income tax burdens, our report demonstrates similar discrimination. Did you know that a one-earner married couple with two children on the OECD average wage for the UK faces an income tax burden that is 27% greater than the rest of the developed world? Such a family in the UK pays 39% more income tax than an equivalent French family, three times as much a US family and more than 10 times as much as a German family.

So, the message could not be clearer. Families in the UK in general are treated less favourably than in other countries when it comes to the tax burden. At CARE, we have long argued that this discrimination should end. But it will take bold, proactive policies to reverse this trend.

Let's ask two fundamental questions. Firstly, what has led to this situation? Secondly, why does this matter?

The answer to the first question lies in the UK's uniquely individualised tax system. In 1990, independent taxation was introduced. We have no problem with this. We have no desire whatsoever to return to the days of the 'married man's allowance'. But unlike other nations where independent taxation also exists, the UK adopted an unusually individualistic form of independent taxation which is almost entirely blind to family responsibility.

The result is summed up in our latest report. Families, and one-earner married couples with children especially, are faced with a crippling tax burden. Moreover, it is tragically reflective of an ideological bent towards individualism. We live in a culture where personal autonomy is everything. In that context, the mere notion of family responsibility and even the terms itself can feel outdated.

Secondly, why does this matter? Let me stress that CARE has no desire to discriminate against single people. That is not what we are about. Rather, we want to see the tax system changed so it treats everyone more fairly. One key way to do that is to address this long-standing issue of how the current system treats families. Coming as CARE does from the foundation that families are good and created by God as a key building block in society, it is unacceptable that the tax system treats certain family models so badly.

Alongside multiple other factors, I'm convinced our current tax system and the way it treats families has contributed to the scale of family breakdown in the UK, that is at epidemic levels. If you care about the family, we must look at anything and everything that is making family life difficult. That includes the tax system, which demonstratively puts certain families at a disadvantage.

If the Government is serious about levelling up across the country, it cannot ignore this obvious issue. CARE's research could not be clearer that urgent action is surely needed. Alongside a review of the income tax system, we also want to see an enhanced marriage tax allowance. This is because marriage should be recognised as a social good, an institution created by God for the benefit of society.

The Government has a choice to make. It can either choose to be pro-family, or it can choose to bow to the prevailing currents of social attitudes today. Tax policy is not neutral, and it says something about our nation that families are treated so badly. CARE supports policies that will enhance, not detract from family life. Our latest report makes good recommendations that offer a way forward. Let's hope the Government has the courage to engage with them.

James Mildred is Communications Manager for CARE