In 2013 it was reported in the BBC that 25% of Londoners were living in poverty. According to London’s Poverty Profile. The study found that 28% of Londoners were living in poverty 7% higher than the English National Average. http://www.bbc.co.uk/news/uk-england-london-24517391
It is superficial to advocate that Governments have honored their long term promises to empower those who work in essence to make work pay there is still to this day the concept that Low Paid and Middle Income Individuals and Families should be taxed and then be compensated through tax credits.
That is a system that is complication beyond reason that is open to fraud and expense to the taxpayer and to the country at large. In London there have been attempts made at reducing the persistence of low pay in the private sector through the London Living Wage this is a pay settlement that should be maintained but reinforced through tax reform.
In reference to The London Progressive Journal Article that I published A new fiscal policy for London? by Oliver Healey
Thu 29th Sep 2011. http://londonprogressivejournal.com/article/view/853/a-new-fiscal-policy-for-london
I advocated “The London Assembly should be given tax raising powers as London’s economy differs from the rest of the UK in general, having higher housing costs and a generally greater expenditure. The power to reform income tax could, for example, be used to give London residents on low and middle incomes a tax cut to help them through these difficult economic times.”
In controlling Pay Poverty in London there is the requirement for Fiscal Devolution to the democratically Accountable London Assembly of such tax raising powers because in bureau shaping the London economy there would be savings made in removing in work benefits and their replacement by the London Income Tax.
The Tax could be administered through either a higher tax allowance or a reduced tax rate say 10% but if the Government wanted to take that 28% of Londoners out of poverty permanently and contribute to reducing the Budget Deficit.
They would be most advised to set a London Tax Allowance of say £3,500 and reduce the Tax Rate levied on Incomes in London from 20% to 10% this would enable the consolidation of benefits into straightforward and transparent tax reductions for the majority of Londoners.
If People retained more of their gross earnings they would not have to rely on tax credits to replace income that they should have kept in the first place.
In financing the tax reductions the budget block grant that London receives from Whitehall could be reduced in stages as the London Assembly takes over the collection of income tax revenue. Fiscal autonomy for London would see a saving in public expenditure, as the block grant would halve, but would also see London benefit from higher tax revenues in the long term. The London Assembly would have the finances to deliver the improvements that Londoners need but have long been denied because of inadequate political leadership.
In transforming The Future of The London Economy there will need to be comprehensive reform.
I believe that Government should tax less those who can ill afford to be taxed and then be reimbursed through Working Tax Credit.