Friday, 23 March 2012

Taxing granny?

It's no surprise that the Labour Party has jumped on the Chancellor's decision in this week's Budget to phase out higher personal allowances (the point at which you start paying income tax) for pensioners, dubbing it a "granny tax".

I'm not quite sure of the rationale behind higher personal allowances for pensioners.  There are obviously rich as well as poor pensioners just as there are highly paid as well as low paid workers.  While poorer workers and poorer pensioners don't pay income tax, they do pay far more proportionately in taxes and duty on food, petrol, heating and beer (a mixture of mild and old ale is nicknamed "granny" incidentally).

The way to help poor pensioners and workers is to raise personal allowances for everyone, increase the minimum wage, link pensions to wages and phase out indirect taxes in favour of a progressive income tax.

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