Wednesday 21 September 2011

If you ask the wrong question, you'll never get the right answer (2)

UKIP's press office asked me if I could respond to HM Treasury's Consultation Document on merging income tax and Employee's National Insurance. I set aside last Sunday afternoon for a bit of fun with numbers, but didn't get very far: the document itself kicks off with this (click to enlarge):
I duly responded as follows:

Dear Sirs

Your Table 1.A suggest that you are not taking the matter at all seriously:

Against 'Entitlements provided' you state that Employee's National Insurance gives 'Entitlement to contributory benefits, such as state pension; also helps fund the NHS'.

You know as well as I do that Employee's NIC raises less than £50 bn a year, but the state pension costs about £70 billion a year and the NHS costs over £100 billion a year. So there's a bit of a mismatch there.

Not only that, but Iain Duncan Smith proposed - quite rightly in our view as this was a key part of UKIP's Pensions Manifesto for the 2010 General Election - that the contributory principle for the state pension should be scrapped and the state pension and Pensions Credit be merged into a flat rate Citizen's Pension.

As to the substantive question 1, we agree wholeheartedly that there is no difference in principle or in practice between income tax and National Insurance, and that the two should be merged into a flat-rate tax on all incomes as soon as possible.

Regards [etc]

8 comments:

dearieme said...

"... also helps fund the NHS": you know as well as I do that a sizeable part of the population treasures this daft belief, and you wish to disabuse them of their comforting folly. Heartless bastard!

Mark Wadsworth said...

D, they also believe that "I've paid for my pension through my national insurance" or "VAT is a tax on consumption" or "My council tax pays for local services".

People will believe a lot of things if you repeat it often enough.

Sobers said...

Does that mean I can claim statutory sick pay even though I'm self employed then?

Roue le Jour said...

The "wrongness" of the question is the abolition of the wrong NI. It is the employers contribution that needs to be merged with the employees. We could then get rid of the artificial and obstructive distinction between "Employed" and "Self Employed".

Mark Wadsworth said...

S, quite how that will work under the Universal Credit is unknown. If I were in charge there'd be a universal Citizen's Income, it woudn't matter whether you're employed, self-employed, unemployed, housewife or student.

RLJ, Employer's NI is indeed the second worst tax of all. Rolling the whole thing into a flat tax on incomes would make the best of a bad job (before we shift over to taxing land values instead).

QP said...

Does that mean I can claim statutory sick pay even though I'm self employed then?

Of course that is what Lloyd-George envisaged when National Insurance was introduced. As the name suggests is was an insurance policy that could be drawn upon to fund health care or other support if/when needed.

Wrt LVT/CI: as now I guess there is nothing to stop people taking out private insurance (and pensions) to fund these things if they don't want to rely on state handouts. However I think you need to be wary of a situation where this becomes the norm for the majority. Then what happens to the minority left, who may find, for what ever reason, their access to this provision is squeezed.

Anonymous said...

, quite how that will work under the Universal Credit is unknown. If I were in charge there'd be a universal Citizen's Income, it woudn't matter whether you're employed, self-employed, unemployed, housewife or student.

Uncle Stalin will be even prouder of you for that, what a load of unrepeatable bullshit.
Fuckov.

Mark Wadsworth said...

Comrade F, are you playing some sort of game whereby your comments become ever stupider, ruder and less relevant, just to see how far you can go before I start deleting them?

PS, I do like the fact that your repeated what I said and then pronounced it unrepeatable, thereby proving yourself wrong.

PPS, I guess authoritarians and statists like you simultaneously approve of the contributory principle as well as means-testing, which are in fact diametric opposites.