Cameron may weaken on marriage tax penalty plan

David Cameron may be forced to water down his party’s plans to end the tax penalty for married couples because of the economic climate, according to Shadow Cabinet sources.

Reports say Mr Cameron is considering ending the penalty only for married couples with children, instead of to all married couples.

The Treasury says removing the penalty for all married couples would cost nearly £5 billion. Previous estimates put the cost at £1.4bn.

However, family breakdown is believed to cost the UK economy £24bn.

Under the Tory proposals being considered, married couples would receive a combined tax-free allowance instead of individual allowances.

Many studies have shown that British married couples are suffering a heavy marriage tax penalty.

Think-tank Civitas said in January that couples in Britain are financially better off if they split up.

It said that some families could be up to 20 per cent poorer for staying together.

An August report by the Christian group CARE said couples who stay together could lose between £58 and £68 every week.

It highlighted what it called a “couple penalty”.

Another study published by CARE in February found UK married couples are suffering a bigger marriage penalty than those in other countries.

The study said while other countries find some way of recognising marriage in the tax system, Britain is failing to adjust the amount of tax paid by earners with dependent spouses.

A married UK family with one earner and two children pays 20.6 per cent in tax if they are on an average wage.

In America such families pay nearly twelve per cent, and in Australia just ten per cent.

The plans being considered by the Conservative Party came in a report from the Centre for Social Justice released in July.

The think-tank, headed by former Conservative leader Iain Duncan Smith, suggested changing the tax system so that married couples are not penalised.

It also suggested couples who were seeking a divorce should have a compulsory three-month “cooling off” period first.

The report also recommended marriage classes before tying the knot and counselling to help prevent marriages from breaking down.

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