THE
ROLE OF
EMPLOYERS IN
THE OPERATION
OF WFTC, FROM
BOTH THE
EMPLOYER AND
EMPLOYEE PERSPECTIVE
8. The Budget provides that the WFTC will be
introduced from October 1999 and that it could be payable through
the pay packet from April 2000.
9. However, employers are already the unpaid
tax collectors on behalf of the Government for NICs and PAYE and
employers also fund such benefits as Statutory Sick Pay (SSP);
Statutory Maternity Pay (SMP) and redundancy pay. Large businesses
have extensive personnel departments to deal with such responsibilities—in
the small firm it is more often than not the owner manager performing
the calculations on the kitchen table.
10. The FSB would certainly support the suggestion
in Martin Taylor's report on work incentives[2]
that the Inland Revenue, rather than the employer, must calculate
entitlement.
11. Martin Taylor's report suggests that the
current in-work benefits system blunts the incentive to work "because
of the need to claim and the hassle and stigma involved"
and if benefit was paid through the pay packet "it would
reduce the stigma currently associated with claiming in-work support".
12. However, not only do employers need no extra
burden administering benefits, but employers would also prefer
not to become too closely involved with employees' personal situations
because it imposes on workers' privacy. Similarly, organisations
representing various groups in society (such as Gingerbread which
campaigns on behalf of single parents) have expressed reservations
on this issue.
13. Industrial relations could be soured if
administrative errors creep into the system resulting in benefits
going to the wrong people or not being paid in time.
14. A further problem arises if a low-paid worker
is in multiple employment—a common situation for cleaners;
bar staff etc. In such a case, which employer will pay the benefit?
15. If the benefit is to be paid through the
pay packet, the FSB would look to the Government to pay employers
the tax credit up front.
THE
IMPLICATIONS OF
THE CHILD
CARE CREDIT
INCLUDING THOSE
ON WORK
INCENTIVES, PUBLIC
EXPENDITURE, AND
ISSUES ARISING
FOR USERS
AND PROVIDERS
OF CHILD
CARE
16. It is very difficult, both operationally
and financially, for small employers to provide childcare in the
workplace. Unlike large businesses, the practicalities of childcare
provision is beyond the majority of small businesses. Hence large
businesses can attract employees with the added bonus of childcare
provision; small employers cannot.
17. The FSB therefore believes the childcare
tax credit could play a part in encouraging those with young children
back into the jobs market.
June 1998
2 Budget 98-The Modernisation of Britain's Tax and
Benefit System-Work Incentives: A Report by Martin Taylor. Back
