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The planned introduction of new tax breaks for UK families is being halted by a "political tug of war" in the coalition government, the Centre for Social Justice (CSJ) has warned.
The independent think tank, which seeks solutions to poverty, made the claims in its annual report card on government policies. The report, concerned with the government's approach to "tackling family breakdown", points to what the Centre calls a dangerous lack of progress in the introduction of transferable tax allowances or in eliminating the 'couple penalty' in the welfare system.
At the root of this stagnation are differences between the Conservative and Liberal Democrat sections of the coalition, the CSJ says. The Conservatives had entered government with a pledge to bring in tax breaks for married couples, but reports of coalition rifts on the issue have constantly surfaced. Late last year, Deputy Prime Minister Nick Clegg argued that marriage should be a private decision, with most people getting married "not because they have looked at their tax returns and seen that they are going to get some cash back from the state". Conservative Prime Minister David Cameron, on the other hand, wants the government to recognize the importance of marriage in the tax system.
Also slammed is the government's introduction of a cap on the tax reliefs available for charitable donations. Under new rules introduced in the 2012 Budget, any individual claiming tax relief of more than GBP50,000 (USD80,000) will be limited to 25% of their annual income or GBP50,000, whichever is greater. Charities have warned this could cost them millions of pounds in donations as a direct result. The CSJ concludes that the cap is disastrous, damaging to morale and suggests that some ministers do not appreciate the role played by non-state agencies in the fight against poverty. According to the CSJ's Managing Director Christian Guy: "It is wrong to brand philanthropists as tax dodgers as the mishandled arguments of ministers have done."
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