Direct taxation: personal taxation
In 2013 the UK government introduced proposals to ‘recognise marriage’ in the income tax system, by allowing some couples who are married or in civil partnerships to transfer some of their annual personal allowance of tax-free income between themselves. The WBG argued that these transferable tax allowances (TTAs) breach the principles of independent taxation and, like joint taxation, would disincentivise married women from employment. Further, because they would boost the income of the higher earning spouse, 85% of whom are men, TTAs would increase income inequality between spouses and between men and women. The WBG also argued that the £700m cost of transferable tax allowances should be spent in more targeted and socially useful ways.
Direct taxation: company taxation
Since 2010 the UK’s main rate of corporation tax has been reduced from 28% to 20%, with the government aiming to reduce it to 17% by 2019/20. The WBG has pointed out that this policy loses significant revenue and contributes to an international race to the bottom in corporation tax that will hit women worldwide. It also increases income inequality between men and women, since men make up the majority of business owners, top managers and shareholders.
The WBG has defended the UK’s zero-rating of food and children’s clothing for VAT. It has also argued that reductions in specific duties on alcohol and fuel are populist measures that directly benefit middle income men more than women or poorer men. For example, cumulative cuts in fuel duties that will have cost the UK exchequer £9bn by 2020 have mostly gone to men, because men are more likely to own cars, own cars with higher fuel consumption and drive longer distances than women.
The WBG has criticised successive rises in the annual personal allowance, the annual income that individuals keep before they pay income tax. Such rises are regressive. The 43% of adults who do not earn enough to pay income tax, 66% of whom are women, do not gain anything, and higher earners, mostly men, gain more than lower earners. Successive increases in the personal tax allowance and higher rate threshold implemented since 2010, will not only exacerbate the gender income gap, they will cost the Treasury £19bn per annum by 2020.