National Insurance: How are your contributions used?
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The Prime Minister and his Cabinet ministers are describing the move as a levy on social care and health. They argue it is needed in order to overhaul the UK’s social care system. Mr Johnson has refused to recommit to the Tory manifesto promise not to raise taxes.
He also declined to affirm his pledge to not raise income tax or NI when asked about plans for tax hikes at the Downing Street press conference on Monday.
Hinting that a proposed offer was imminent, he said: “It won’t be too long, I assure you.”
Whitehall sources have suggested no deal has yet been reached.
If Mr Johnson does go ahead with the increases, he could be going against the very ethos and principles he entered Parliament with as a young Tory MP.
In 2002, aged 38, he waded into the debate on Labour’s proposed NI hikes.
Gordon Brown, then-Chancellor, in his sixth Budget announced a one percent rise in NI to help finance a £6.1billion increase in health spending next year – much similar to Mr Johnson’s present-day position.
Labour’s announcement came following the Wanless review into financing the NHS.
Mr Brown called his Budget, which lasted 57 minutes, a guarantee of the “British ideal” of the free at the point of use NHS.
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Mr Johnson and his Tory colleagues accused the Government of targeting the country’s lowest earners while filling their pockets with extra cash.
He said: “It has been wonderful to behold those on the Labour Benches, because this is what they came into politics to do: tax and spend.
“It is what they like doing. They want to take money away from the productive sectors of the economy and give it to public sector special interest groups, which they largely represent.
“Labour Members may have missed two points in their discussion of the national insurance hikes: first, that those raises will hit the very public sector workers whom they hoped would benefit from the Chancellor’s spending plans; and, secondly, as the hon. Member for Newbury (David Rendel) rightly said, that the national insurance increases are regressive, and someone earning £32,000 will pay exactly the same as someone earning £132,000.
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“That may be why Labour Members were so jubilant: we all know that they are now fat cats and MPs, and will not be as hard hit, relatively speaking, as many of their constituents.”
Lynne Jones, then-Labour MP for Selly Oak, asked: “Does the hon. Gentleman advocate a more progressive rate of income tax for those on higher incomes? If that is his policy, I agree with it,” to which Mr Johnson replied: “I merely point out that it is ironic that Labour Members should cheer a regressive tax.”
He continued: “Those regressive taxes are expected to go a very long way.
“The Chancellor said that he would increase public spending from £390billion to £470billion in about four years’ time.
“I hope that I heard him correctly. If his growth projections are wrong, someone will pick up a large bill, and I expect that it will be the taxpayer.
“It is the judgement of the Chancellor, the hon. Member for Hemsworth (John Trickett) and many others who have spoken tonight that the time is now propitious to raise taxes.”
Today, No 10 and the Treasury have, according to reports, also examined plans for an income tax rise on the over-40s.
However, one Government source told The Guardian that the plans had moved away from that in recent days for concerns the rise would need to be substantial in order to meet the costs.
Chancellor Rishi Sunak is understood to have been clear that any potential tax rise must be agreed and announced at the same time as the new policy on care costs.
This would likely include a lifetime cap at a level yet to be agreed.
While Mr Johnson appears to be going against his previous rhetoric, others have come to his praise.
Former health secretary Jeremy Hunt backed an income tax rise on Monday.
He called it a health and care premium, claiming that a one percent rise would generate £6bn in income that would help tackle catastrophic hospital backlogs and other healthcare needs.
If pushed ahead with, the spirit of the Tories’ so-called “triple lock” will be broken.
However, the rebrand with the added healthcare urgency might help sell the policy to MPs.
Increasing national insurance by 1p for employees and the self-employed would raise around £6billion a year, according to calculations by the Resolution Foundation.
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