Tax or benefit? The changing face of tax administration

As far back as 1972, the government realised that the amalgamation of taxes and benefits presented daunting administrative challenges.[894] A key facet of the (later) Working Families Tax Credit was that it was to be paid to the earning family member through his or her employer. Thus, the credit would usually be paid to men, not women. The government hoped through this approach that the ‘stigma’ associated with receiving what might be viewed as a ‘handout’ would be lessened, because the credit would be associated with the income tax system (as opposed to benefits).[895] This policy was never popular with child advocacy groups, however, who, along with influential research conducted by Goode et al[896] managed to convince the government of the old adage that money would be more likely to reach children ‘going into the women’s “purse” rather than the man’s “wallet” ’.[897]

The perception of whether or not ‘assistance’ through the tax system is a credit or a benefit may be linked to the class and gender of the recipient. What may be perceived as ‘welfare’ when received by taxpayers struggling with poverty may be viewed as ‘a way of helping hard-working “independent” taxpayers’ when directed towards the middle class.[898] The Child Tax Credit legislation is part of a process which began when the Inland Revenue[899] commenced administration of some benefits. Undertaken for reasons of efficiency, this was a startling deve­lopment in the modern history of this agency. In 1999, the Benefits Agency units charged with administering the old-style Family Credit and Disability Working Allowance were moved from the Department of Social Security to the Inland Revenue.[900] The transfer was attributed to plans for establishing the infrastructure that would be needed for the then-upcoming Working Families Tax Credit and Disabled Person’s Tax Credit, and to a hope that this merger would save employers some of the costs associated with administering the new legislation.[901]

Tax credits are distinguishable from benefits in that benefits typically are dependent upon a specified period of unemployment, and are limited in duration.[902] Tax credits need not be limited in duration.[903] Tax credits are meant to provide long-term assistance to families, to encourage them to alter their behaviour and to attain new skills, so the lack of time limits is logical from that perspective. That a tax collection authority should hand some of the money collected back was, simply, startling, but it seemed to make sense. Given the administrative infrastructure of the Inland Revenue, it was perhaps logical to attempt to employ these resources more efficiently.

Is the Child Tax Credit, in truth, anything to do with tax? Is it not simply a benefit? If so, may the title simply be dismissed as a cynical attempt at re­branding? Perhaps, but the importance of language in these initiatives, and its relevance to a feminist analysis of them are not to be underestimated. Brewer explains that although the tax credits originally were introduced as part of a government package to reduce child poverty, their administrative structure indi­cated a growing dissatisfaction with PAYE[904] as a means of identifying household need and targeting benefits.[905] Passing the burden to both the taxpayer and the employer, he suggests, may contain significant portent for the future.[906] If it worked
well, perhaps the introduction of self-assessment for self-employed taxpayers might be extended to non-self-assessing taxpayers, in a ‘self-assessed benefit’ of a sort. As of the end of 2004, however, it could not easily be suggested that it had worked well. Andrews, for example, warned in 2001 that the complexity of the credits’ structure actually was not worth it when compared to the amount of money that families would be receiving.[907] Their early structure also led to initial misunderstandings about ‘credit’ and ‘relief’. Andrews explained that the early Child Tax Credit was, in fact, a true credit of £520, which could be deducted from a taxpayer’s ultimate liability to tax.[908] The Working Family Tax Credit, however, was ‘welfare payment redesignated as a tax credit’, or, simply, a benefit with the name ‘credit’ tagged on.[909] This, however, in these still early days, has proved to be the least of the problems faced by these initiatives.

Подпись: 113 114 115 116 117 118 119 120 Perhaps most unfortunate has been the problem of overpayment. Approxi­mately 80,000 families were placed in the position of having to ask the Revenue if they could keep excess payments with which they mistakenly had been issued.[910] Worse, Ann Redston, chair of the personal taxation committee at the Chartered Institution of Taxation, warned that 80,000 was ‘the tip of the iceberg’ in terms of the poor administration of the credits.[911] Given that the Revenue has announced that it in fact intends to recover much of this overpayment,[912] these fears would appear to be well placed. The attempt to recover these funds has been criticised as ‘over-zealous’, especially when viewed in light of the aims of the legislation. In perhaps the worst case scenario, one mother announced that she now would need to work additional hours to be in a position to refund the overpayment — hardly the balance indicated as an objective by the legislation. Families have the right to challenge requests to refund overpayment if the blame may be ascribed to the Revenue, but fears were expressed that this right is not widely known (nor publicised).[913]

There are other levels of confusion. Wikeley has suggested that: ‘While Child Tax Credit might just as well have been named Child Benefit Plus, there are features of Working Tax Credit that are genuinely new and would not fit comfort­ably in a social security scheme.’[914] This lack of clarity also has implications for the place that the credits should assume within the structure of the taxation of the family, generally — in other words, should the tax credits be ‘taken at their word’ and considered as part of a system of joint taxation (ie, taxation of the family), or are the credits really about the ‘mother’, and hence part of individual taxation? As the Women’s Budget Group has explained, ‘. . . either tax credits are in effect means-tested benefits, and should be treated as public expenditure rather than
revenue foregone as other benefits are, or that they are part of the income tax system and the principle of independent taxation has been breached’.[915] Intriguingly, the Women’s Budget Group believes that

the government has now agreed to implement the OECD[916] conventions on account­ing procedures for purposes of international comparison — ie that the refundable part of tax credits should count as public expenditure and the remainder as revenue foregone; but we are not aware of any commitment to change HM Treasury documents to reflect this agreement.[917]

Generally, the credits are part of a system which is supported by a fundamental adherence to joint taxation. As the credits address basic concerns founded along lines of gender, the gender implications of joint assessment might have been considered by the government prior to their introduction, and the Women’s Budget Group consider it ‘unfortunate’ that this did not occur.[918]

It is particularly unfortunate, perhaps, when considered in the context of what Bennett believes to be Labour’s track record on gender awareness. Included among Labour’s accomplishments in this area are ‘some progress on producing better statistics using a gender perspective’; the development (soon after assuming office) of a ‘policy appraisal for equal treatment’; and research into social security initiatives.[919] Research and policies aside, Bennett suggests that the gendered per­spective has been neglected as Labour’s tenure has progressed, to the point that intentions seldom have produced results for women. Bennett explains that ‘[t]his lack of gender awareness is clearly not a product of ignorance amongst Treasury civil servants. Instead, it must reflect a particular conceptualisation of the major issues facing the UK and the government’s resulting policy priorities’.

What is the problem, though, with programmes that may be described as, perhaps, mildly successful? Other than the fact that the problems which the tax credits are addressing are urgent, and more needs to be done, is there not an argument for applauding steps in the right direction? If such programmes are indeed steps in the right direction, then perhaps, but Staudt described the danger of tax laws which seriously impede women’s efforts towards financial independ­ence whilst giving the illusion of equality.[920] This is a debate which can also become subsumed in concerns over the societal ‘devaluing’ of work performed within the home.[921]

The tax credits are tools with intriguing feminist potential because they are designed to encourage women to work outside of the home. A traditional feminist critique of tax legislation is that it encourages women to stay at home, and thereby increases women’s financial dependence on men.[922] Yet, as has been suggested at earlier points in this chapter, the economic literature addressing whether or not tax credits actually ‘work’, from the perspective of the government’s objectives, is not at all clear. In fact, Gerfin and Leu suggest that

. . . changing the wife’s labour supply would affect disposable income which can be increased above the poverty line. This is the reason why in the public discussion it is argued that this kind of tax credit makes work pay. Theoretically, however, it is well known that the labour supply effects of the tax credit are unambiguously negative.[923]

This has particular relevance when placed in the context of Alstott’s response to proposals, first, to reduce the marginal rate of tax for working mothers; and second, to repeal legislation which ensures equal pay for men and women (in favour of women) with what she describes as ‘feminist’ objections.[924] For example, ‘feminists who see the devaluation of women’s family labour as the central obstacle to women’s autonomy, power, or happiness could oppose market work tax incentives’.[925]

The undoubted political attractiveness of these initiatives aside, ‘if’, as Orloff has argued, ‘strategies based on employment are the only politically viable option, one must still confront the fact that the workplace and the labor market remain deeply structured by gender, race and residence, and care giving responsibilities create a number of problems for many mothers and other caregivers who are or would like to be employed, particularly when they are poor and unpartnered’.[926] The marketplace is a curious destination for mothers, for women, if this is a feminist journey. Of course, marketplace work leads to increased financial independence, but the marketplace is largely drawn along lines of ‘neoclassical economic assumptions [which] do not adequately serve the interests of the vast majority of people, especially those who are less powerful’.[927]

The target of the Child Tax Credit is constructed by the media and by gov­ernment along hazy lines of deliberate confusion. The former Leader of the Conservative Party, Michael Howard, seized on this confusion, and gave it the ‘spin’ of ‘Labour tends to believe it’s all or nothing. You’re either a stay at home mum or a career woman. You’re either Kate Reddy or Gywneth Paltrow’.[928] Howard proposed to reform child-care tax credits by expanding them, such that they may be spent on child-care options beyond the ‘formal’, ‘registered’ carer.[929] He also promised that the Conservatives are ‘looking at ways’ to reduce administrative burdens which are ‘unfair’ on the employer, such that, for example, credits might be paid directly to parents.[930] Additionally, he proposed reforms which would protect parents from the needlessly ‘bureaucratic’ requirement of having to inform the Revenue every time their circumstances change.[931] The latter proposal was potentially, particularly significant, as it indicates that the Tories con­sidered removing the ‘tax credit’ element (confused though it may be) of the Child Tax Credit and rendering it a pure benefit (which, presumably, would be less dependent on information concerning a parent’s changing circumstances, particu­larly if constructed along the lines of Child Benefit). Howard proposed also to consider including a deduction for child care as part of his platform.[932]

As a final question for this chapter, then, what is, potentially, the relationship of the tax-benefit conundrum to the debate surrounding the possible impact of the market on motherhood, or the debate surrounding the commodification of gendered labour?[933] Because the social constructs of class, gender and race are interconnected, the way in which one of these factors affects an individual is related to one’s experience of the other two.[934] A woman’s experience of the gendered construct of motherhood is inevitably affected by her relationship to class. It should be stressed, however, that de-commodification, with its focus on ‘social rights free individuals from reliance on the market’,[935] is equally problematic. Kilkey and Bradshaw argue that this concept is related to the male — breadwinner model of dependence on the market, and is thus of ‘only limited relevance to women’.[936] What, then, constitutes ‘independence’ for women? Freedom, not from the marketplace, but from male dominance over their lives.[937] This may be achieved through a variety of means, including access to independent income, giving ‘women “voice” to negotiate power relations within families, and “exit” to opt out of an unsatisfactory relationship’.[938] The ability of tax credits to provide this exit, however, is less than certain.

Conclusion

The family tax credits upon which this chapter has focused are relatively recent initiatives, born of the political sphere surrounding definitions of the family. Child Tax Credit, in design, is an earned income tax credit, which may be defined as a benefit linked to paid employment. The end-game of earned income tax credits is a ‘working parent’, working in the marketplace. This chapter has drawn attention to research demonstrating that some women in the lower strata of the economy are better off with a child tax credit. But tax credits are presented as being about children: all of society’s children. Child tax credits are designed to elevate the welfare of all children in the economy. This focus on how a mother raises her children can have important feminist consequences.

These consequences include the place of tax credits within a structure which, over the past decade and a half, has acknowledged women’s financial independ­ence as an underlying value of the tax system. Although the place of women’s financial independence on the value hierarchy (potentially) presently may be at risk, tax credits have been presented as a further (not necessarily connected) initia­tive towards this end. Interestingly, though, this independence is being achieved through her status, not independently, but within a family. It is the marketplace, with all of its gendered constructs, which is the locus for women’s liberation. Davis explained that ‘[t]o the extent that the tax system is a source or a subsidizer of patriarchy, the tax system is in fact responsible for the continued oppression of women in this society’.[939] By encouraging women’s participation, tax credits support, even reinforce, the patriarchy of the marketplace.

What will the feminist consequences of these initiatives be? The answer may lie in the fact that this chapter has considered tax credits as part of the changing face of tax administration. Tax credits may simply be refashioned benefits, part of a new administrative order, but this chapter submits that, even if that is their poli­tical reality, they may continue to suggest something more. With this push away from the home and into the marketplace, tax credits do not increase the value which society places on the act of parenting, and given that women continue to bear the bulk of parenting obligations, women’s ‘work’ itself will continue to be devalued. Indeed, tax credits only compensate parenting when it is performed by someone other than the mother. Tax credits will be judged on the extent to which they assist families living in poverty, but they also will be considered for the success (or not) of the hype within which they are packaged. The significant role that tax plays in fashioning the subject of family law may not be, thus, and in this context particularly, a positive one, until the gendered assumptions underlying tax, family and the state[940] are addressed.

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Updated: 14.11.2015 — 13:26