Impoverishing the Self-Employed
In Cynwyl Gaeo where I live, in rural north Carmarthenshire, 27.2% of the working-age population are self-employed.* That’s nearly three in ten. The major employers are Carmarthenshire County Council, and the National Health Service. If you don’t work for either of them — and they both have financial problems — there’s not much else on offer. So we have our farmers, builders, electricians, carpenters, plumbers, artists and artisans, who are self-employed.
Chancellor George Osborne’s proposed bonfire of tax credit entitlements will hit the self-employed very hard indeed. The introduction of the ‘national living wage’ next April, by way of supposed compensation, is irrelevant to them because they have no employer to pay it. And often their total income is already too low to benefit from the higher personal tax allowance of £11,000, scheduled for April 2016.
Working tax credits and child tax credits have become essential to bolster low incomes to the point at which recipients can just about support their families. With no employer to pay them a higher wage, the self-employed face cuts on their own.
Surely a progressive taxation system should be redistributive, from the very affluent to those at the other end of the income scale? This Conservative government seems set on just the opposite, although in May’s General Election only 24% of the electorate actually backed the party. Agreed, this was a higher level of support than for any other party, but hardly an invitation to collapse welfare benefits until they have crumbled away. Slicing off tax credits will leave millions of lower-earning self-employed workers vulnerable to financial disaster and further impoverishment.
More here about the self-employed and their incomes
* Data from the 2011 Census