Child benefit proposals are a crying shame, say MPs

Government proposals to withdraw child benefit payments from higher rate taxpayers have been criticised by a committee of MPs as impractical and unfair.

Under plans announced by the government last month and coming into force in 2013, families with at least one person in the higher rate tax bracket (earning more than 44,000 a year) will no longer receive child benefit payments.

But a report published yesterday by the Treasury select committee expressed concerns over the fairness of the reforms.

It pointed out that while families with one parent not working and the other earning 44,000 a year will lose their benefits, a family with two earners both just short of the higher rate threshold could make 87,000 a year and still qualify for the payment.

The report said the changes also raised the prospect of workers just under the higher rate tax threshold being discouraged from aiming for a pay rise if in doing so they would move above it and lose out as a result.

It said it would be "economically perverse" if families just below the higher rate band and getting a pay rise would be worse off as a result.

The committee warned the government to "carefully consider" the potential for "perverse economic incentives, perceived unfairness and enforceability" under the planned changes.