This is a tax policy.

The working families tax credit is intended to reduce the tax payments of low to moderate income earners with families.

The WFTC is withdrawn as income rises over a set limit - £91.45 per week from April 2001 - The rate of withdrawal is currently 55p for every extra £1 earned.

If you lowered this rate then households would recieve more income per period and disposable income would increase, so reducing a cause of child poverty.

Disclaimer Statement

Note the following is a very broad statement that has been used for educational purposes. The actual relationship may not hold due to the complexities of the issues. Therefore, it should not be taken literally.

The problem with this policy is some concern about the wider implications.

• The policy would reduce government tax receipts. This may increase the pressure on the government budget and result in either an increase in tax within another area or a reduction in the level of government spending.

The WFTC is set at a withdrawal rate of 55% (55p in every pound). You can change the WFTC within the range of 20% to 80%.

Alleviating child poverty home page »»
Return to the question page »»