Azara Blog: Financial Times complains about "cost" of civil partnerships

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Date published: 2006/12/10

The Financial Times says (subscription service):

A rush of same-sex couples registering their civil partnerships since the law changed a year ago has brought a far greater-than-expected cost to the government.

Tax experts say the government's initial estimates of 22,000 civil partnerships by 2010 is likely to be breached in the next few months, four years ahead of target.

The cost to the chancellor has been compounded as the strongest demand for civil partnership ceremonies has been seen in London and the south-east, where property prices are highest meaning households are far more likely to be hit by inheritance tax.

Gay and lesbian couples who form civil partnerships gain the same rights and responsibilities as husbands and wives in areas such as tax and pensions. Just like in marriage, civil partners can inherit from each other with a special spouse exemption from tax. They can also pass assets such as property and shares between each other.

Maurice Fitzpatrick, senior tax manager at Grant Thornton, the accountancy group, said the fact that many of the tax benefits have been taken up by people in wealthier areas has significantly increased the cost to the government, as these people would typically be liable for larger tax charges.

He calculated that the cost to HM Revenue & Customs would already have been around £10m and he expected that this would increase significantly over coming years.

It's unbelievable that the FT would run such a dreadful story. Are they saying that gay and lesbian people should be discriminated against just because the government might lose a bit of money? If the heterosexual marriage rate suddenly shoots up (and marriage comes and goes in fashion) then would the FT complain that the government is losing money? Further, the underlying basis of the story is also nonsense. This inheritance tax is not avoided so much as deferred (unless the surviving partner either spends the inheritance or marries someone who survives them, etc., ad infinitum). The main problem with the inheritance tax exemption is not that civil partners have the right to the exemption but instead that it still arbitrarily excludes large numbers of people, e.g. co-habiting couples and siblings who live together. Although the inheritance tax is reasonable in theory, this blatant discrimination immediately says that it should be abolished.

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