Finance (No.2) Bill — New Clause 2 — Independent taxation and family benefits — 8 Nov 2010 at 17:30

The majority of MPs rejected a proposal to review the impact of new child benefit eligibility rules on the principle of taxing people independently even if they are married.

The rejected proposal was made while MPs were debating the second Finance Bill of the Parliament, titled the "Finance (No.2) Bill"^[1][2].

Labour MP Chris Leslie introduced a new Clause 2 to be added to the bill saying^[3]:

• The Treasury shall, within six months of the passing of this Act, commission and publish an independent review of the implications of the operation of section 32 of the Finance Act 1988 (Married couples-abolition of aggregation of income) on methods of determining eligibility for family benefits including child benefit.

Mr Leslie explained the purpose of the clause during the debate^[3], telling MPs:

• New clause 2 would force the Treasury to come clean on its plans to withdraw child benefit from families with higher-rate taxpayers from January 2013, which will take £2.5 billion a year from those families from 2014-15 onwards.

During the comprehensive spending review, the Chancellor, announced^[4]

• I have taken the difficult decision to remove child benefit from families with a higher rate taxpayer.

During the debate on this clause Labour MP Chris Evans was one of those highlighting a key issue arising due to independent taxation saying^[5]:

• I am deeply concerned by proposals that will see a lone parent or single-earner couple earning just above the higher rate threshold lose their child benefit while a dual-earner couple both earning just under the threshold would continue to receive it.

While introducing his new clause Christopher Leslie MP drew attention^[3] to the fact that the way Child Benefit eligibility was to be determined was eroding the principle of independence and privacy in relation to tax between married people.

Technically the vote was on if the rejected new clause ought to have been read a second time, ie. if it should have continued on the path to becoming law.

• [1] Parliament webpage on the Finance (No. 2) Bill 2010-11
• [2] Finance (No. 2) Bill 2010-11 as amended in committee, ie. as it was before the debate during which this vote took place.
• [3] Chris Leslie MP, House of Commons, 8th November 2010
• [4] George Osborne MP, House of Commons, 20th October 2010
• [5] Chris Evans MP , House of Commons, 20th October 2010

Debate in Parliament | Source |