Thomas More Institute

Last week Channel Four television programmed a documentary entitled Go Greek For A Week. Three distinct individuals were shown living as their counterparts in Greece had been doing according to employment and circumstance. The programme focused on the financial generosity of the Greek State, and also on the ease with which taxation might be evaded. As such productions go, it was of no great quality, and attention is drawn to it here for a very different reason.

In the programme a married bus driver expressed surprise at receiving a marriage allowance. This brought back the memory of a pledge made in the Conservative Party’s Manifesto for the last General Election:

Today, Labour’s tax and benefits system rewards couples who split up. A Conservative government will end the couple penalty for all couples in the tax credit system as we make savings from our welfare reform plans. We will recognise marriage and civil partnerships in the tax system in the next Parliament. This will send an important signal that we value couples and the commitment that people make when they get married.

A more detailed policy was set out in April 2010. There would be a transferable tax allowance whereby any unused tax allowance for either husband or wife could be transferred to the other spouse. The press release noted that the majority of European countries recognise marriage in their tax and benefit systems.

Among these are Greece, France and Germany. Greece provides an allowance for the individual earner who is married and working for the public sector. A Distributive Fund for Employee Family Allowances covers private sector workers, with funds coming from employers and employees. The amount received increases with each child that the earner has. In Germany married couples can pool their income and apply a process called ‘income-splitting’ whereby, with both partners now earning notionally an equal income, the tax payable is reduced for many. In France taxation is worked out on a household basis, the overall income once calculated being divided by a divisor dependent upon the size and nature of the household. For a married couple with no children the end result is similar to that under the German system of income-splitting. Children, however, are regarded as dependents and have an effect upon the divisor, resulting in a lesser tax bill for the household. The think-tank Respublica reckons that a family with three children on average income in France would not have to pay income tax.

These facts have not been set out here to argue for increased harmonisation or for emulation of other European countries, but rather in illustration of the several ways in which marriage and children are recognised elsewhere as beneficial to society at large. All of us would wish to live in a secure society. Many factors contribute to making up such a society, but surely a key-factor everywhere is stability of marriage and family. Virtuous qualities beneficial to a wider society, such as commitment and responsibility, are formed as well as manifested within married relationships.

The British tax and benefits system currently rewards and incentivises things governments regard as beneficial to society. Monetary benefits awarded those with legal charge of children. Those caring for people with higher-level disabilities on a full- or part-time basis also receive benefits. Tax relief can be gained for business travel, membership of an accredited or professional register or for the purchase of small tools and specialist clothing. There are tax reductions and rebates for those who better insulate their home or invest in ‘green’ technology. Currently a marriage allowance exists in the UK tax system, but only if at least one spouse was born before 6 April 1935.

The later is the only survival of the couples allowance in the system. It had been universal until the Budget of 1999, when it was replaced by a children’s tax credit. The effect of this decision, whether explicitly intended or not, was to remove the recognition of marriage as a good for society.

Some of us will have hoped that, with the Conservatives as the larger party in the coalition government, the Manifesto promise on married allowances would be enacted within a budget. Indeed the coalition agreement states,

We also agree that provision will be made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to this coalition agreement.

That would appear to indicate intent to introduce this measure. As yet, however, there has been no change made to the system. An amendment was indeed tabled to the Finance Bill in June of this year advocating that that this be effected. The official Government line was that the cost was prohibitive at this time and that the matter would be considered in better times when administrative issues had been thought through. The amendment was duly rejected.

The supreme importance of marriage for the well-being of society is being ignored. In a time of great economic uncertainty it is even more pressing that the government make an effort to restore recognition of an institution so fundamental to society. An economy inevitably reflects in some measure the society within which it operates, and a society wherein the most stable and fundamental of institutions is recognised will be more likely than any other to develop a stable economic regime.