Benefits and Taxation

HC Deb 06 November 1995 vol 265 c645W

16. Mr. Hain

To ask the Secretary of State for Social Security what plans he has to reform the relationship between benefits and taxation. [39700]

Mr. Burt

In 1988 we reformed the relationship between income-related benefits and tax to reduce the incidence of high marginal tax rates. In line with the Government's long-standing policy that benefits which replace earnings should be taxable in the same way as earned income, incapacity benefit became taxable in April 1995. We have already announced that the back-to-work bonus and the child maintenance bonus will not be subject to taxation. Any further plans on taxation are a matter for my right hon. and Learned Friend the Chancellor of the Exchequer.