Friday 21 October 2011

Emma Boon on top form

Emma Boon of the TPA, who waste most of their time bleating about Council Tax talks sense in today's City AM Forum:

The national insurance fund is little more than an accounting fiction. The government is already consulting on moving to a flat rate pension and qualifying years for that benefit could as easily be assessed on number of years paying income tax as number of years paying national insurance...

... transparency is fundamentally a feature of this tax reform, not a bug. If the real basic rate is 40.2 per cent, not 20 per cent; the real higher rate is 49 per cent not 40 per cent; and the top rate is 57.8 per cent, as the Centre for Policy Studies has suggested, then it is better people should know that than be misled into thinking they are getting a better deal than they actually are. An honest tax system would mean a better-informed public debate and could even improve industrial relations.


Lengthy, but well worth a read.

3 comments:

TheFatBigot said...

I can see a benefit to retaining NI but turning it into what its name says it is. Reduce income tax rates and increase NI rates until the amount going into the NI pot is sufficient for unemployment benefits, state pensions and the NHS.

This would have the advantage of: (i) showing that all these "free" benefits are in fact incredibly expensive, (ii) allowing all claims for additional expenditure in these fields to be costed directly in additional NI contributions, (iii) make it more difficult for governments to buy votes by promising increased spending on "popular" measures and pretending it won't cost ordinary people anything.

Mark Wadsworth said...

TFB, you are approaching this from the wrong end. If we merge income tax and NI, there is no reason why we can't call the merged tax "National Insurance". The point is to illustrate how much tax is actually deduted from people's wages.

We could of course do the same thing with Council Tax - by actually increasing it to pay for all services which benefit land owners...

Bayard said...

TFB, the pols hate ring-fencing, because it means they can't siphon off money intended for boring/popular things, like the NHS, and spend it on fun/macho things like making war in foreign countries. Also what you said: those "advantages" are major disadvantages as far as they are concerned.