22 OCT 2015

Tax Credits

Everyone knows we have to live within our means as a nation. Indeed at the general election we set out plans to save £12bn in welfare spending. Our reforms will still mean five in ten working families will still be eligible for financial support.

Of course Labour would like to spend more, tax more and borrow more. Yet we know that's a fool's errand. We'd end up with higher interest rates and a weaker economy: Labour's Crash of 2008 was not that long ago.

What's more, the reforms to tax credits are part of a much wider package. We are introducing a new National Living Wage of £7.20 an hour in April 2016. This is set to rise to £9 an hour by 2020, at which point someone who is currently working full time on the National Minimum Wage will be £5,200 a year better off.

The National Living Wage will directly benefit 2.7 million people who are currently paid less than £7.20 an hour and it is estimated that a further 3.25 million people will benefit as employers are forced to increase wages. This will be a massive benefit to people here in Dover & Deal.

We are continuing to increase the personal allowance (the amount of money you can earn before you start paying income tax). When Labour left office, it was less than £6,500. By 2020, it will be £12,500. By doing this, typical taxpayers will be able to keep £1,205 more of their hard earned cash and we have ensured that anyone on the minimum wage will pay no income tax whatsoever throughout this Parliament.

We're also introducing 30 hours of free childcare for working parents of three and four year-olds and tax-free childcare worth up to £2,000 a year.

When you take into account all of the welfare and tax changes announced in the Budget, most families will be significantly better off by the end of this Parliament as the following examples show:

 

  • A couple with two children where only one parent is in work on the National Minimum Wage will see their income increase by £2,480
  • A lone parent with one child working 35 hours on the National Minimum Wage will see their income increase by £1,550
  • A couple with two children where both parents are working 35 hours a week on the National Minimum Wage will see their income increase by £5,570
  • A single person with no children working 35 hours on the National Minimum Wage will see their income increase by £2,110

 

There is no denying that some of the decisions we have taken are tough. Yet we have to get this country back in the black, keep interest rates low with jobs and wages on the rise.

We've come a long way together over the last five years. Unemployment has fallen dramatically. Wages are rising. Interest rates have remained low. We are helping the least well-off to get paid better and taxed less. Less welfare, more work and bigger pay rises are the way to ensure we continue to see more jobs and money here in Dover & Deal and across Britain as a whole.

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