Taxing a Tax - The Impact of Secret Tory Cuts

Jim Elder-Woodward reflects on the way in which the further targeting of disabled people also impacts the Care or Disability Tax

Author: Jim Elder-Woodward OBE

Over the last five years of the UK's Coalition Government £11 billion has been taken from households containing a disabled person, including loss of disability benefits, as well as the loss of Housing Benefit due to the Bedroom Tax, etc. This has resulted in many becoming isolated within their own homes and more reliant upon their informal carers.

However, over the weekend  of the 28-29 March 2015 the BBC announced they had found ‘secret’ documents suggesting how a Conservative government would make the further £12 billion cuts if they win the General Election in May.

Among their plans, the BBC discovered the following measures:

Although I recognise some people may well lose everything, to which they may be presently entitled, and therefore may well be in a far worse situation than I, the thought that I might be taxed on my DLA is just mind-numbing.

Just now, the equivalent of my DLA [both higher care and mobility components, i.e. £138.05] plus some of my pension is taken from me. A total £285.45, is seen as my weekly ‘contribution’ to my care plan and is paid to local government in return for my adult social care support. This ‘contribution’ is, as disabled people call it, a ‘Care Tax’. In Scotland we are campaigning to abolish such ‘Care Taxes’ altogether.

However, if the Tories do eventually tax my ‘Care Tax’, they will be, in effect – taxing a tax.

Now Ian Duncan Smith, the Secretary for State for Work and Pensions, quickly appeared on the Andrew Marr Show last Sunday (29 March) to dispute hotly that these ‘plans’ were not Conservative policy: no ‘decisions’ had been made, he said – a phase which will become familiar during this election, because no politician of whatever colour is going to tell the electorate what plans he has to harm their welfare and prospects.

But a lack of a decision leaves open the probability of a decision to tax this Care Tax, which at the present rate of 20% would result in an additional £27.61 being added to my ‘Care Tax’, making it £313.06 per week. Thus, my Care Tax will rise from 54% to 59% of my already taxed pension, plus my currently untaxed DLA. That’s 15% higher than the richest pay in income tax.

However, disabled people could find that they have some surprising allies in campaigning against this double taxation. One of the big losers will be local authorities who will find that many of the people they currently charge for services will have less money to pay for care in the “financial assessment.”

In fact, in those councils which charge a 100% Care Tax the individual will be no worse off, they will simply have less money to pay the Care Tax and so their contribution will go down. As a rough guess, in Scotland it will cost local authorities £7.5 million per year. Another nail in the coffin of the Care Tax, perhaps. With less people getting PIP, soon the Care Tax will not be worth collecting!

The publisher is The Centre for Welfare Reform

Taxing a Tax - The Impact of Secret Tory Cuts © James Elder-Woodward 2015.

All Rights Reserved. No part of this paper may be reproduced in any form without permission from the publisher except for the quotation of brief passages in reviews.

Article | 31.03.15

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