One-earner families being penalised, says CARE

A report by Christian charity CARE has shown that families with one working parent are being penalised by the British tax system.

The report analyses the tax paid by one-earner married couples with two children on an average wage in 2007 and 2008. They compared the amount of tax they payed with equivalent families in other Organisation for Economic Co-operation and Development (OECD) countries.

The results showed that British one-earner families paid an average of 44 per cent more tax than other OECD countries, up by seven per cent from the 2006 to 2007.

The report showed that the tax burden on British one-earner families, after national insurance contributions, tax credits and child benefit, was on average 2000 pounds higher than in other OECD countries. Compared with the USA, a British family pays 3000 pounds more in taxes.

The research was carried out by fiscal policy consultants, Don Draper and Leonard Beighton. They also concluded that one-earner families paid more tax than families where both parents earn.

Professor Rowthorn, from Cambridge University, said in the foreword to the report, that a family with two earners at £10,000 a year, will pay less tax than a family with one earner on £20,000 a year. This, they said, is unusual, as most countries take into account the number of adults sharing the income and then reduce the tax – however this is not the case in the UK.

Dan Boucher, director of parliamentary affairs for CARE, said that the tax system is encouraging the disappearance of traditional families and that children lost out as a result. He said that this also reflected the culture of individualism referred to in a recent report from the Children’s Society.

The findings of the report showed that on average a one-earner married couple on an average wage pays 55 per cent of the tax paid by a single person with no dependents, in other OECD countries. However in the UK the figure was 76 per cent, and has increased every year since 2001.

Draper and Beighton claim this shows the government has shown no sign that it recognises that one-earner families are bearing a disproportionate amount of the tax burden.

Frank Field MP has said, “A fiscal priority is to recognise two parent families when levying tax and calculating the eligibility to tax credits. Ceasing discrimination against two parent families would also be the most significant move a Government could take in helping create the most stable environment in which to nurture children.”