The government should replace all major welfare payments with “negative income tax”, an eyebrow-raising report from free market campaign group the Adam Smith Institute (ASI) has suggested.
The call to ditch tax credits, jobseeker’s allowance, and the universal credit system for a new system comes as the government has taken fire for changes to tax credits which critics say could cost the nation’s poorest an average of £1,300 a year.
The radical negative income tax would pay out to British citizens in decreasing amounts until they reach a certain wage, when they would begin paying tax.
Those out of work would receive the maximum amount.
The ASI says the scheme would be structured to encourage people into work, with the final “negative taxed” salary always higher if more hours were worked.