Ian Duncan Smith condemns tax credits as 'not fit for purpose'!

[chem1st]

http://www.bbc.co.uk/news/uk-politics-20873180

 

The work and pensions secretary has attacked the tax credit system put in place by Labour, saying it had resulted in "a sorry story of dependency, wasted taxpayers' money and fraud".

 

Working people on tax credits cost the taxpayer 6 times more than the unemployed on t'dole.

Houses claim about the same amount as workers, but why houses need to be paid for existing in the first place I do not know.

 

Writing in the Daily Telegraph, Iain Duncan Smith said the credits - to top up the incomes of the lower-paid - were "haemorrhaging money".

 

He said fraud and error in the system under Labour had cost £10bn.

 

Even for true claimants, "tax credits were not fit for purpose", he said.

 

Tax credits are paid based on estimates given by claimants for their income for the year ahead, with HM Revenue & Customs responsible for reclaiming any overpayments at the end of the year.

 

"In the years between 2003 and 2010, Labour spent a staggering £171bn on tax credits, contributing to a 60% rise in the welfare bill," Mr Duncan Smith said.

 

The system, he said, "was wide open to abuse".

 

The so-called "income disregard" - the amount a person's income can rise before their claim must be reassessed - was raised from £2,500 to £25,000 in 2008.

 

"It will come as no surprise therefore that fraudsters from around the world targeted this benefit for personal gain," Mr Duncan Smith said.

 

The government is planning to slash the disregard to £5,000.

 

Mr Duncan Smith also said that officials carried out far fewer checks on tax credit claims than benefit claims, despite estimates that one in 12 tax credit claims were incorrect or fraudulent, compared with fewer than one in 25 benefit claims.

 

It seems it ain't about "benefit cheats" anymore. It's about "tax credit cheats"... Ironically, some workers have been getting more on tax credit than on the dole!

[maxmaximus]

http://www.bbc.co.uk/news/uk-politics-20873180

 

 

 

Working people on tax credits cost the taxpayer 6 times more than the unemployed on t'dole.

Houses claim about the same amount as workers, but why houses need to be paid for existing in the first place I do not know.

 

 

 

It seems it ain't about "benefit cheats" anymore. It's about "tax credit cheats"... Ironically, some workers have been getting more on tax credit than on the dole!

 

People on the dole don't pay tax income or NI whilst many of the people claiming tax credits do and in some cases pay more in tax than they get back in credits, so to know how much tax credits costs you would first have to take off the tax these people pay.

 

I’m not sure why he’s brought it up when they are going to be replaced with universal credits anyway.

[Titanic99]

I sometimes despair at how our politicians and media distort things like this to suit their own political agenda.

 

Working Tax Credit is awarded to people to supplement their low wages, to ensure that families have a minimum standard of living.

 

So instead of attacking those in receipt of this, why don’t we change the rules so that employers pay these people a decent living wage in the first place.

 

But no we laud those that make a lot of money from paying low wages as great entrepreneurs and business people, whilst attacking the poor that depend on Tax Credits to supplement their income.

 

Complete and utter madness!!!!

[maxmaximus]

It’s not that simple because a living wage is different for a single person living with mom and dad and a couple with ten kids and a house, tax credits and child tax credits address that difference.

How would an employer pay a cleaner a living wage when they might only works 2 hours a day?

[Titanic99]

It’s not that simple because a living wage is different for a single person living with mom and dad and a couple with ten kids and a house, tax credits and child tax credits address that difference.

How would an employer pay a cleaner a living wage when they might only works 2 hours a day?

 

You can only get Working Tax Credit if you work over 16 hours (possibly more for single people)

[I1L2T3]

Interesting.

 

Fail to police the bankers and when they abuse the system it's not their fault. They're just doing what they can get away with.

 

Fail to police tax credits and when people abuse the system come down on them like a ton of bricks.

 

I'm by no means defending the latter but there needs to be some consistency from this government.

[L00b]

I'm by no means defending the latter but there needs to be some consistency from this government.

There would be consistency...if there was any parity between their respective levels of power and influence. The hand that feeds and all that.

 

That's not a partisan post, just a casual remark about the very obvious

 

Now for the consistency bit : the interesting statistics are (1) the alleged 1-in-12 fraudulent working tax credit application versus 1-in-25 benefit application and (2) the ten-fold increase in the 'disregard' threshold from £2,500 to £25,000 in 2008.

 

Put in the context of the demonisation of 'benefit cheats' started and healthily entertained by Labour, if these 2 stats do not clearly translate a Gvt buying itself an electorate at the time, I don't know what does...

[I1L2T3]

There would be consistency...if there was any parity between their respective levels of power and influence. The hand that feeds and all that.

 

That's not a partisan post, just a casual remark about the very obvious

 

The interesting statistics are (1) the alleged 1-in-12 fraudulent working tax credit application versus 1-in-25 benefit application and (2) the ten-fold increase in the 'disregard' threshold from £2,500 to £25,000 in 2008.

 

Put in the context of the demonisation of 'benefit cheats' started by Labour, if that's not buying yourself an electorate, I don't know what is...

 

To be honest it's not a surprise To me that there are so many dodgy tax credits applications. It was very easy to make a mistake on the application when me and the missus last filed one in. In fact we did unwittingly make a mistake and got threatened with a one thousand pound fine. The mistake was to put maternity pay in the wrong box - it made no difference to the total income declared and no difference to the credits awarded. 4 weeks of investigations and a lot of stress for us. No doubt a case of HMRC hitting targets using easy targets.

 

I'd like to see a breakdown of the problems with tax credit claims. My hunch is that

most will be genuine mistakes by claimants or HMRC.

 

The alternative is not very palatable, that there is more welfare fraud by the strivers than the scroungers? Ouch IDS!

 

---------- Post added 31-12-2012 at 13:46 ----------

 

Just a few further notes having re-read Duncan-Smith's article.

 

He makes it clear that HMRC only do limited checks against high risk applications. If so does that skew the 1-in-12 figure?

 

Just remembered that working tax credits were the replacement for Family Credit which the Tories brought in in 1988. As always when we see something less than ideal introduced the foundations for it are often put in place by the other side.

[Mister M]

People on the dole don't pay tax income or NI whilst many of the people claiming tax credits do and in some cases pay more in tax than they get back in credits, so to know how much tax credits costs you would first have to take off the tax these people pay.

 

I’m not sure why he’s brought it up when they are going to be replaced with universal credits anyway.

 

I think there is a trend for politicians who want to introduce welfare 'reform' is to blitz the newspapers with stories about scroungers, try to divide workers vs shirkers etc.

It's always aimed at the poorest and most vulnerable - they rarely talk about the welfare state being a subsidy for landlords charging extortionate rents and employers paying poverty wages.

Whenever someone suggests that the wealthy elite should pay a bit more they are accused of stoking up envy; they don't seem to bother about stoking up feelings of resentment towards the unemployed.

[taxman]

 

 

He makes it clear that HMRC only do limited checks against high risk applications. If so does that skew the 1-in-12 figure?

 

 

HMRC operates a "process first, check later" system. This means money is paid out with little or no checks done on the claim. If, by a bizarre stroke of luck, a false claim is later checked HMRC, in a lot of cases, will simply remit the debt.

 

On other occasions someone processing a claim will spot an obviously fraudulent claim but they are prevented from doing anything about it because it isn't their job. Even when it can be proven that some claims are false it's hard to stop them due to the law governing tax credits and how they are assessed. It's been a farce from the day it was introduced.

 

I was receiving tax credits when I first started work at HMRC....just how daft is that. HMRC paid so little that they then had to top my wages up with tax credits.....instead of paying a proper wage in the first place.

 

It's a right scam. It subsidises low pay, it's easy to defraud and it encourages people to only work the minimum required hours before they cash in. People earning £4-5k a year can receive over £30k in tax credits depending on their "circumstances". The sooner it is replaced the better.