THE TELEGRAPH: Middle class parents who take time out from work to look after their children will lose out on thousands of pounds of Government handouts under a reform of child benefit announced by George Osborne.
In a move designed to save a billion pounds a year, the Chancellor annouced that higher-rate taxpayers will no longer be eligible for the benefits.
However the way the system is calculated threatens to put families with just one breadwinner at a disadvantage relative to households where both parents work.
This is because families with a combined income of £87,000 where both parents earn just under the higher-rate tax threshold of £44,000 are still entitled to the benefit while those with just one breadwinner earning £45,000 are not.
If the withdrawal of the benefit is not tapered, it could also mean that parents earning just below the threshold could be penalised if they get a pay rise.
The system relies on higher rate taxpayers declaring whether anyone in their household is claiming the benefit which can then be deducted from their earnings.
Mr Osborne defended the plan by pointing out that the costs of conducting a means test on every family would eat up much of the savings from cutting the benefit payouts. He claimed that the average income for households with one higher rate taxpayer is £75,000.
Speaking in an interview on ITV's Daybreak this morning he described the move as "a tough but fair decision."
He added: "It's just not fair to ask someone who's on £15 or £20,000 a year to be paying for the child benefit of someone who's on £50,000 or even more."
"At any other time, I wouldn't do this. But Labour left us with a heck of a mess." Stay-at-home parents to lose out in child benefit reform >>> James Kirkup, Political Correspondent | Monday, October 04, 2010
BENEDICT BROGAN: Child Benefit: What's fair about taxing stay-at-home mums? >>> | Monday, October 04, 2010
