Why does no one in the government see it is simply inefficient to take money only to process it and then give it back.

Will the Tories end this insanely inefficient micromanagement?

Paul Smith, Dundee, UK

Taxing the Poor is good sense- they generally don't have accountants- and in spite of what Gordon says, hundreds of thousands of them won't be eligible for Tax Credits- so a win-win there. Eating the Poor would also make good sense, if only they had better diets- we learned that lesson with Cheap Chicken.

G. Harley, London,

Raising the personal allowance to a realistic figure is long overdue and would make for a less complicated system.

Taxing the lowest paid into deeper poverty is a nonsense. Nevertheless, Gordon Brown has justified the removal of the 10p tax rate by telling us that Tax Credits are the remedy.

This not only demeans decent hard-working people on low incomes (who wish to live on what they earn) but many (including myself on less than £9000 a year) would not qualify anyway.

Why has it taken so long for Labour MPs to wake up to this outstanding failure in social justice?

Jules W, London,

The tax threshold needs to be raised to 15,000 pounds, at least, before people begin to pay anything.

margie , victoria, australia

Carl from London is missing the point. I expect to pay tax and I do but would he like to be worse off by about £360 per year per household. He clearly does not understand just what this means and how it works. Until he understands I suggest that he refrains from comment. I have retired early and budgeted for this on the rules that were in place, now I will barely have enought to live on.

Pat Hiscoke, Caterham England,

To take people’s money, then a cut and give rhe remainder away is daftas it always results in a gap between those who get it and those who do not being subject to high marginal tax rate. Nor can it be targeted accurately enough no matter what the rules. The only sane way is not take it in the first place via a high personal allowance and then universal flat rate benefits for unemployment and first child alone [after all, the only reason for not having enough money should, in a sane world, be due to not being able to work] which is added to income for tax purposes so there is very little cost in collecting and distributing, there is no marginal rate at all and it avoids making work not worthwhile, no-one is left out and far more can be given because it costs so little to administer.

R Mason, London, UK

The dilemma is not whether or not the poorest should pay tax, but what proportion of their gross pay should be deducted. It appears that this government is quite prepared to make poorer people pay a greater proportion of their take-home pay in tax as part of their strategy to schmooze the middle-income voter. They are no better, or any more advantageous to poorer people than the Tories. It is now becoming a contest between 'Nu' Labour (what a ridiculous name) and the Conservatives as to who can be the more 'Tory-lite'.

When Jesus said, ' the poor will always be with us', he was not agreeing with the observation, but was commenting on the human social view that really, in the scheme of society, the poor do not matter. In electoral terms, as far as this government, and most other governments are concerned, the poor do not matter, except when they cause trouble. The poor will be told to 'get on with it' and 'move on', while the Chancellor gives £50 billion to the banks. Work that out.

Bob Ericson, Tewkesbury, Glos,

I agree: increase personal allowances and scrap tax credits. Simplicity is what we need; there are tens (hundreds?) of thousands of civil servants administering the current complexity – and still errors are rife.

In addition to the massive savings, there would be an improvement in the nation’s quality of life; I give advice to the public on their problems with the tax and benefits system – most of them (and some advisers) are baffled and stressed by the complexity.

The overall tax burden is of course a separate debate – a starting point would be to assume it stays the same, i.e. income tax is increased to compensate for abolishing other taxes and raising the personal allowance, although the massive savings in bureaucracy would reduce any such increase.

Then abolish NICs and introduce local income tax – more huge savings in bureaucracy and simplifying people’s lives (courts currently clogged up with council tax defaulters etc etc).

John, Manchester, UK

"It would have been easy for Mr Worstall to provide these calculations in his article. Wonder why he didn't ?"

Archie, because in 500 words it's not possible to say everything.

Tim Worstall, Messines,

Have been following this Labour Gov very carefully since 1997 and have come to the conclusion that they are now at this juncture not the Gov for the next 5 years. They need a rest and take stock because they cannot have my vote. I have several alternatives which I'm quite happy with even considering someone independent if he/she has a brain and conscience. We need to look at the general picture of this country before in all breaks up. As sson Scotland has that mandate to go independent then that's the end of the UK and you can blame in all on this Labour Gov since 1997 as I will not be voting for you in local nor general elections next time. The 10p tax has just put the nail in Labours coffin.

JOhn, Merthyr, Wales UK

BROWN HAS HAD 10 YEARS TO GET US IN A MESS - NOT SOMETHING THAT HAS HAPPENED OVERNIGHT - EASY TO BLAME THE U.S.A
The next time a dustman needs a doctor he can get a fellow worker to treat or operate on him - Don't hear the poor complaining about the large amounts spent on benefits to the workshy or immigrants - - Suggest they find out how much is being spent on wasted gov projects - gov depts set up to monitor the stupid laws they bring in - Brown should have managed the economy and spending better, when times were good and put some aside - LOOK at the root cause of our troubles now and what caused him to scrap the 10p rate.

Margaret, Bristol, UK

The Times reported on 5 February 2008 "The Public Accounts Committee says that more than £1 billion is still lost due to fraud and error in the tax credits system"

The Chancellor states that the abolition of the 10p tax rate is saving £7 billion.

The tax credits system has been in place for five years.

Is it too cyynical to think that the government is recouping its losses in the tax credits system by taxing the very same people who should be applying for tax credits.

Has the Sheriff of Nottingham been reincarnated.

Richard E Small, Southampton, England

Hi Im one of the millions of workers on minimum wage but i keep telling myself at least i dont need to sign on and im just keeping the wolf away from the front door We have the pride to work and stay away from benefits But the abolition of the 10p threshold has left me about 5 pounds a week worse off but it amounts to an hours take home pay Not much you may think but it roughly cancels out our last two minimum wage increases This so called caring Labour government are hurting the very people who are voting for them Yours sincerely E Swift

Ernie Swift, Wigan, England

"I have not heard one good argument why low-income workers should be excluded from tax"

Suggest you read economics about 'marginal utility of wealth' then.

In a nutshell - everyone needs certain basics of life food, water, clothing and shelter (not home ownership). These benefits do cost money - which is why the first amount of income is tax free. After that, as your salary goes up you still spend approximately the same on these basics - but you are in a position to buy more goods. It is this increase in quality of living that is really being taxed.

John Wood, Hull, UK

Increasing the personal allowance to £12000 while abolishing the system of tax credits would, of course, leave the "working poor" (like the family on £200 per week ) no better off than now - and probably worse off, because the tax credits they receive are currently more than the tax they pay.

(Of course, they would be able to keep all of any hypothetical 50% pay increases they might receive - maybe they could use it to help to run the hypothetical yacht that they won't get either ?)

However, higher earners would be much better off as this would remove £6500 of their income from the tax net, saving them at least £1300 per year - and possibly more, depending on what was done with the 40% tax band.

It would have been easy for Mr Worstall to provide these calculations in his article. Wonder why he didn't ?

archie, aberdeen, uk

It is so true that the benefits system is a control mechanism, but it a control mechanism that has got completely out of control. I know many people that don't work simply because they can manage on benefits. Some of them consider that it is unjust that I have more them them, after working full time for more than 40 years. Ok I was lucky to have a job throughout my life but it was also helped by the fact that I looked for work when i needed it and went to work when i had a job. I would call for a reversal of the 10p rate cut and a progressive cut in benefits to "drive" the workshy on to the job market. But tighten up on the minimum rates of pay so that those that work are paid the rate for the job. And if there is any need for a change in tax rate it is at the higher level. The boost that Mrs T gave to the wealthier end of the spectrum by cutting the higher rate of tax has, in my view, had a bigger influence on the rich / poor divide than anything

Dean Evans, Cornwall, UK

I stand to gain a bit from the 22p to 20p cut in income tax. Both my daughters, in their early twenties, just setting out into the world of work and trying to make a life for themselves (one with a £11,000 student loan still hanging over her head) will be about £20 a month worse off from the abolition of the 10p tax band. Conscience tells me I should give them a hand-out to make things more equitable. But can one honestly think of a more obviously unfair policy? Gordon, just go, and take your cronies with you. We really don't want to wait till 2010.

Grahame, Newton Abbot, UK

Dave Wetzel,
I too am highly sympathetic to land value taxation: I'm not quite a Georgist but like the general idea. But a matter for another day perhaps?

Tim Worstall, Messines,

I have never understood why we take money from people, only to pay someone else to give it them back as benefits.

Surely it can be seen that this is waste of a very scare commodity? We should be as economical with our money as possible - not throwing it away by handling it twice.

By leaving it in the hands of those that earned it there is also less opportunity for fraud.

I agree that we all should pay our way in this society of ours, but I fail to see the value in giving benefits to those we tax. Lower taxes, fewer benefits.

Steve Brown, Leicester,

Thanks Mr Chancellor. My massive 3% pay rise (less than £500 pa) will mostly disappear in tax.

But don't worry my council tax bill only went up by 11.5% and the 15% on energy bills and the list goes ever on.

And of course being single I get no tax credits. Yet every year I get closer to minimum wage as that rate of increase also exceeds inflation.

Simon, Lincs,

The tax system is very regressive. Ordinary working people should wake up to how unfairly they are treated.

May Smith, London,

Never vote labour again ! Brown rails at Mugabe, hah, at least Bobby Mugabe had the balls to hold an election.

Victor, london , uk.

What gets my wig is that there are so many people out there who do not pay taxes and instead take 'benefits' from those of us who earn (however little or however much) and pay our taxes. That is where the problem lies - whether regressive or progressive taxes are enforced is incidental. Whereas people whinge and moan about poorer taxpayers helping to pay for university educations, at least that particular cost to the taxpayer bears fruit - doctors, dentists, those of us making deals to export our services and bring more work and more money to this country generally have had the privilege of higher education.
I stand to gain from the 2p decrease, however, I would really like to see where our taxes are being spent as they sure aren't being spent where I'd like to see the money going - education, defence, health, pensions...
We are being taxed on EVERYTHING, sometimes twice (think gifts and inheritance tax). If the government stopped throwing our money about, we could all pay less tax.

Louise, London,

It would not be necessary to tax any incomes below £30k pa if the Government collected the share of annual land rent created each year by each one of us in the community whether as consumers, workers, investors or even entrepreneurs.

We pay taxes to maintain and improve services or build infrastructure and landowners collect the increased land rent that our taxes create. (eg the Jubilee Line tube extension in London cost taxpayers across the country £3.5bn to build but provided a £13bn untaxed windfall to those few landowners who owned land within 1,000 yards of the eleven new stations).

An annual Location Benefit Levy on ALL land, with each site valued for its optimum permitted use, would return some of this wealth to the public purse and could reward all of us in the community with reduced income taxes!

Dave Wetzel, London, UK

Flat taxes please!

Nicholas J. Rogers, London, UK

I totally disagree with the author of the article.
If we want to achieve a fair tax system everybody should be subject to tax in the same way.
I have not heard one good argument why low-income workers should be excluded from tax. Everybody should pay tax according to income, be it low or be it high. Everybody wants the benefits of public services so everybody should pay for it.
Also, if the state offers financial support via the tax credit system - where is the problem in that? If people need the state for support they will have to ask for it and will be assessed by their needs and receive help accordingly.
For me this row shows that because the focus of nu Labour has relentlessly been on the "poor" and those in "need of help", a whole section of society has now got so used to being "looked after" by the state that any little change can cause such upset.
When Brown destroyed the pension system nobody cried "unfair" although the consequences of that are far worse.

Carl, London,

I think that It is so very interesting and I like it.

sangk13n, hanoi, vietnam

Nancy - what you said. I agree with every word

Sarah, London,

Why stop there...raise the tax limits , and let's quote salaries as net figurer rather than gross , public employees shouldn't have to pay tax ...they should just get paid a nett figure and then we can do away with the ridiculous infrastructure we need to take back the money we give away in the first place.

Adam , London, England

I totally agree the poorest part of society is now carrying the largest burden of tax.

Terry, Newcastle, UK

Tax credits were and are a mechanism for social control engineered by a government which cannot get away from is socialist instincts. The fact that it is inefficient and riddled with fraud is a price worth paying in the long term plan of turning everyone and everything to the client state.

simon, London,

Is it not possible that this is to provide some enployment for the huge army of civil servants that the Blair/Brown aministration has employed in order to buy votes in key marginal constituencies?
Just a slightly cynical view...

Rob Jones, Nantwich, Ches, UK

minimum wage was designed to increase tax take not to enrich low paid. nulabs first and biggest con

terry sullivan, morden,

I was nodding my head through most of the piece until the beginning of the last paragraph which was a masterful statement of gloves-off class warfare. The Blair government tried to justify the rise in tuition fees with the question, 'Why should a dustman pay for a doctor's education?' Apart from the fact that the dustman will be damned glad the doctor is there when he has a heart attack, the answer is: because this is a society and we all pay our share. We pay our share of national defense, government, policing, health care, as well as our share for those agencies and groups who safeguard the great traditions and beauties of our society like national monuments and, yes, the glory of opera. Some people's 'fair share' is zero. Where the line should be drawn -- that is the argument. Not this classist assumption that dustman shouldn't pay for and somehow don't deserve beauty.

Nancy, London,

Yes,I agree...raise the personal allowance,this system of tax credits is bureaucratic,expensive and ridiculous,nor does it help pensioners under 65 yrs with a fixed income who are taxed on tiny incomes
Never vote Labour again!

Jean Matthews, London,

Yes. Now could someone do something about the appalling incentives being created by the war on child poverty? The problem with ever larger amounts being made available for poor "families" with children is that it offers huge incentives to ill educated young girls to become pregnant. We would be better off paying money to girls not to become pregnant. While we all applaud the aim of reducing child poverty, the present dumping of money on the problem is just creating perverse incentives.

Ken, Oxford,