The report, by think-tank the Institute of Fiscal Studies, claims thatbig increases in the child element of the child tax credit would be"very successful in targeting money at the poor but very weak for workincentives".
It adds that increasing means-tested support could be counterproductivein tackling poverty because it may discourage people from working.
But the Child Poverty Action Group (CPAG) said parents did not decidewhether or not to work based purely on the impact it would have on theirtax credits.
Paul Dornan, head of policy and research at CPAG, said: "There isn'tmuch evidence that people act purely in line with the incentivesarrangement suggested. There are other important reasons for going towork and other barriers, such as adequate care for children. I think taxcredits have been important in reducing poverty."
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