Francois Hollande & British Family Allowances

Most of those of us who are towards the right of the political spectrum have been chuckling happily at the latest embarrassment of François Hollande. For those reading this from outside France, a flagship part of the President?s election manifesto was to tax annual incomes above a million euros at 75%. But his proposal to enact this has been struck down by the Constitutional Council. In France, unlike England, income taxes are levied on households not on individuals. But this ?super tax? was to be levied on individuals. So a couple who both had incomes of 900,000? would not pay this extra tax but a couple, with only one earner of over a million but with a significantly lower joint income than the other couple, would pay it. The Constitutional Council would not accept this because it was unfair.

For those of us who follow British politics, doesn?t that ring a bell? It does for me, in part because of a conversation I had with a member of my family recently in England. There the Government has, very reasonably in my view, decided to claw back all or part of the family allowances paid to the better off. But the amount the family will lose will depend on the income of the parent who is the higher earner, regardless of the income of the other. So, just as under the Government?s proposal in France, a couple with two earners each on £40,000 a year will not be penalised, whereas a couple where one of them earns £60,000 p.a. while the other stays at home caring for their children, will be.

We do not have a Constitutional Council in the UK; we rely on the good sense of ministers and parliamentarians under our system of parliamentary sovereignty. In general I believe that this system serves us well but, this time, it has let us down, badly. So has the Government. Of course, we are told, it is all very difficult, because we have separate taxation for husbands and wives. But the information, i.e. the income of both husband and wife, to make a system work fairly is known to the Government. If ministers had the power, when a senior civil servant tells them that something cannot be done, to find a more junior civil servant who can find a way in which it can be done and then make the two swap places, I believe that the problem would have been solved. As it would have been had David Cameron told Iain Duncan Smith that if he could not find a fair system, then he could not have his legislation and would have to raise the money elsewhere. All politicians know that there is no such thing as a tax that everybody considers fair. But that is no reason for adopting a system that everybody considers unfair.

The Government have done themselves electoral harm in two ways. Firstly the system is so daft that it has made them seem economically incompetent. And the battle for voters? perception of economic competence is going to be a key element of the next election. Secondly they have stirred up considerable resentment among parents affected, many of who would otherwise have voted Conservative but who will certainly not do so now.

As the song has it: ?Ain?t it all a blooming shame?.

Robin Baker

Leave a Reply