Credit where it's due? An assessment of the new tax credits

In 2003: the government will introduce new tax credits to provide financial support for children and low-paid workers: the integrated child credit and the employment tax credit. The reform to support for children aims to unify existing payments in a way that provides a guaranteed stream of income for those with children, whether they are working or not. The credit for people in work will provide an income top-up for low earners - something that those without children have not benefited from before. The government has not announced the impact of the reforms on the public finances, but both will cost the exchequer money, so this Commentary considers the likely sums involved. We also examine whether the reforms look like fulfilling their stated aims: making work pay, relieving poverty and creating a new type of state support that is simpler and less intrusive for claimants.