Prime minister Boris Johnson and chancellor Rishi Sunak confirmed in the Sunday Times that the NI rise would go ahead in April.
An influential liberal Tory think tank is now also urging chancellor Rishi Sunak to ‘mitigate the impact on workers and employers’ from the £12bn increase in national insurance contributions from April.
On Sunday, prime minister Boris Johnson and chancellor Rishi Sunak confirmed in the Sunday Times that the NI rise would go ahead in April, despite opposition from MPs as millions of families also struggle with a cost of living crisis due to rising inflation and soaring energy prices.
Under the proposals, employers, employees and the self-employed will all pay 1.25p more in the pound for National Insurance from April 2022 for a year. Then from April 2023, the tax will be collected as a new Health and Social Care Levy.
Now leading centre-right think tank Bright Blue has also added its voice to those criticising the tax hike, urging the chancellor to shift the burden of tax from work to wealth.
In a new report the think tank accepts that although the new Health and Social Care Levy cannot be abolished, which it called a ‘surprising tax rise for a Conservative government to implement’, it can nonetheless be made fairer.
It also called on the government to ensure that people who worked on after they reach the state pension age should pay national insurance rather than being exempt.
The report also said: “The Government should prioritise significantly lowering the rate of the employer element of the HSC Levy from 1.25% on income above the existing employer NICs threshold as soon as possible.”
Among its other recommendations were for the Health and Social Care Levy to be broadened to apply to pensions and rental income.
Sam Robinson, Senior Researcher at Bright Blue, commented: “Though the public finances need to be repaired in the wake of the pandemic, simply squeezing more money out of the tax system without improving its design would be a mistake. The Government should not pass up the opportunity to recalibrate the tax system to better reward work and effort while responding to the rising importance of wealth and inheritance in life outcomes.”
Basit Mahmood is editor of Left Foot Forward
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