Tory pressure group calls for German-style taxation of married couples

Ranil Jayawardena, Chairman of the Conservative Growth Group Photo: Julian Simmonds for The Telegraph

Tory pressure group urges Rishi Sunaka to reform 'unjust' tax system to reflect household income.

A conservative growth group led by allies of former Prime Minister Liz Trouss has called for German-style taxation. married couples.

It highlights concerns about the current punishment for couples in which one person makes good money and the other makes relatively little or no money.

Ranil Jayawardena, Chairman of the Conservative Growth Group and former member of Ms Truss Cabinet, co-authored with Tom Clautery, director of research at the Center for Policy Studies, wrote a paper outlining a series of reforms.

Mr. Jayawardena and Mr. Clautery recommends turning marriage allowance into a fully transferable personal allowance, which could then be transferred to the spouse in full, not just at the current 10 percent rate.

Basic rate only. taxpayers can currently use the allowance, but the document calls for the restriction to be lifted.

“Unfair to families”

The report goes on to call for the German «split income» approach, which involves pooling the income of a married couple, dividing the result by two, determining the amount of tax the person on that income would have to pay, and then doubling the result.

< p>This ensures that families with the same total income will pay the same amount of income tax regardless of how their income is distributed.

“The UK tax system is unfair to families, focusing almost exclusively on individual income without regard to household income,” the report says.

“We believe that the tax system should be more family-friendly. We should not discriminate against non-couples, but we are actively discriminating against too many families at the moment.”

Mr. Sunak is also being called upon to make child benefits universal again and turn childcare subsidies into a simple refundable tax credit for parents with children under school age.

“Families should be able to save more of their money and spend their. as they wish,” Mr Jayawardena told The Telegraph. “They deserve it and they should keep it. That's why we need to reform income tax to make it family friendly. Let's celebrate, not punish people who are trying to do the right thing.»

«Unfair, not conservative»

Supporting the abolition of the inheritance tax advocated by The Telegraph, Mr Jayawardena added: «It is right to also work on abolition of inheritance tax. It's a death tax. It's unfair, it's not conservative, and it should be abandoned.»

The report argues that the levy «doesn't even do particularly well what it's supposed to do…it helps to level the playing field within society.»

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In the short term, the authors urge ministers to follow up on George Osborne's unfulfilled 2007 pledge to raise the inheritance tax threshold to £1 million.