Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-19T01:37:32.246Z Has data issue: false hasContentIssue false
  • English
  • Français

Hidden Costs of the Welfare State: Employers' Compliance Costs and the Working Tax Credit

Published online by Cambridge University Press:  01 April 2009

Michael Godwin  and
Colin Lawson
Michael Godwin
Affiliation:
Department of Economics and International Development, University of Bath
Colin Lawson
Affiliation:
Department of Economics and International Development, University of Bath E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper explores the impact of the decision to make the Working Tax Credit (WTC) payable via the employer, until March 2006. A unique survey shows the unequal distribution of compliance costs across firms and industries. It also suggests that the arrangement had some unanticipated results, and may have damaged the effectiveness of the WTC. Some employers' compliance costs may have been shifted to employees. So from a social policy perspective administration is policy – the delivery system affects outcomes. However the switch to payments through HMRC from April 2006 does not remove all compliance costs from employers.

Type
Articles
Information
Social Policy and Society , Volume 8 , Issue 2 , April 2009 , pp. 185 - 195
Copyright
Copyright © Cambridge University Press 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Athayde, R., Blackburn, R. A., Hart, M. and Kitching, J. (2003), ‘Working families' tax credit and disabled persons' tax credit: the views, attitudes and experiences of employers’, Inland Revenue Research Report 3, Small Business Research Centre, Kingston University, www.inlandrevenue.gov.uk/research/report3-employersqualitative.pdfGoogle Scholar
Bath University Centre for Fiscal Studies (1998), The Tax Compliance Costs for Employers of PAYE and National Insurance in 1995–96, Vol. 1, Inland Revenue Economics Papers No. 3, www.inlandrevenue.gov.uk/pdfs/bathv1.pdfGoogle Scholar
Brewer, M. (2006), ‘Tax credits: fixed or beyond repair?’, Institute for Fiscal Studies, pp. 133−48.Google Scholar
Goode, J., Lister, R. and Callendar, C. (1998), Purse or Wallet? Gender Inequalities and Income Distribution within Families on Benefit, London: Policy Studies Institute.Google Scholar
HM Revenue and Customs (2005), Regulatory Impact Assessment (RIA): The abolition of payment of Working Tax Credit via employers, London: HM Revenue and Customs.Google Scholar
Treasury, HM (1998), The Working Families Tax Credit and Work Incentives: The Modernisation of Britain's Tax and Benefit System, No. 3, London: HM Treasury.Google Scholar
House of Commons Committee of Public Accounts (2007), ‘Tax credits’, 22nd Report of Session 2006–7, HC487, 23.4.07.Google Scholar
Inland Revenue (1999), ‘Tax credits act 1999 and accompanying regulations regulatory impact assessment’, December.Google Scholar
Inland Revenue (2002), ‘The new tax credits: a regulatory impact assessment’, July, www.inlandrevenue.gov.uk/ria/nteria.pdfGoogle Scholar
Institute for Fiscal Studies (2006), The IFS Green Budget: January 2006, London: The Institute for Fiscal Studies.Google Scholar
McKay, S. (2002), ‘Tax credits, benefits and family budgets’, Personal Finance Research Centre, University of Bristol, March.Google Scholar
Metcalf, D. (2007), ‘Why has the British minimum wage had little or no impact on employment?’, Discussion Paper 781, April, Centre for Economic Performance, London School of Economics.Google Scholar
Millar, J. (2008), ‘“Making work pay, making tax credits work: an assessment with special reference to lone-parent employment’, International Social Security Review, 61, 2, 21–38.CrossRefGoogle Scholar
NACAB (2001), ‘CAB clients' experiences of working families' tax credit’, February, www.nacab.org.uk/pdfs/workingprogress.pdfGoogle Scholar
NACAB (2004), ‘Personal communication reporting further occasional instances of employers refusing to take an employees claiming WTC’, March.Google Scholar
Taylor, M. (1998), Work Incentives: The Modernisation of Britain's Tax and Benefit System, No. 2, London: HM Treasury.Google Scholar
Whiteford, P., Mendelson, M. and Millar, J. (2003), Timing it Right? Responding to Income Changes: A Comparison of Australia, Canada and the UK, York: York Publishing Services for the Joseph Rowntree Foundation.Google Scholar