From The Daily Mail:
Philip Hammond was last night urged to abandon plans for a £1billion tax raid on the self-employed, amid warnings it would wreck Britain’s growing entrepreneurial culture.
The Chancellor is reported to be planning a rise in National Insurance rates for the self-employed in tomorrow’s Budget to bring them closer to the level paid by those in salaried jobs. The move could eventually see the National Insurance rate paid by self-employed people rise from 9 per cent to 12 per cent.
Closer? It's not much closer is it? Employees suffer two levels of NIC, which cost 22.7% of gross pay (£25.80/£113.80); the self employed suffer one layer which costs 9%. NICs are a regressive tax and the rates above £43,000 are lower; this largely cancels out the fact that income tax is higher above £43,000 (i.e. the system is a lot flatter than people think).
I'm all in favour of aligning rates, but how about reducing the NICs suffered by employees as well and let the two meet in the middle?
Chris Bryce, chief executive of the Association of Independent Professionals and the Self Employed, said the Chancellor should hold a full consultation before deciding on a massive hit on the sector.
He added: ‘If the Chancellor were to increase National Insurance contributions for the self-employed, a large number of low-paid people could lose out on a significant amount of income.’
Three per cent of not much is not much, is it?
One former minister warned that Mr Hammond would face a major backlash if he pressed ahead with the full rise.
‘We can’t, on the one hand, claim that we are the party of the strivers while, on the other, say we’re going to hit millions of them with a massive tax bill,’ he said.
How about the 'millions' of employees whom you are already slapping with an NI bill that is twice as high?
Treasury sources did not dispute that the overall tax burden could rise slightly as a result of tomorrow’s Budget measures, despite warnings the UK is already heading for the highest tax burden since the 1980s.
Funny how the Tories get away with increasing taxes while still running huge deficits, exactly the thing they are always accusing Labour of having done. History shows that over the long run, Labour run smaller deficits/are more likely to reduce the national debt and do not collect more in tax.
The only good news from all this is that all parties appear to agree that National Insurance Contributions are indeed just another tax.
Tuesday, 7 March 2017
From The Daily Mail:
Labels: National Insurance