Don’t fund social care via National Insurance hike – Yorkshire Post Letters

From: Professor Len Shackleton, Editorial and Research Fellow, Institute of Economic Affairs.

Should National Insurance be raised to pay for social care reform?

HIKING National Insurance will be yet another burden on working age people at a time when jobs are insecure. Much of the public may believe that National Insurance pays for the NHS, and social care would just be a natural addition.

But NI is not ringfenced and is simply an income tax by another name, albeit with different exemptions, starting points and arbitrary changes in rates which don’t coincide with tax bands.

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It is wrong to place the burden of this tax squarely on the shoulders of younger workers, without extending NI to post-state pension age taxpayers to help pay. A rise in employer as well as employee contributions may give the illusion that businesses will help pay, but economists agree that workers ultimately pay for ‘employer’ NI through lower pay.

Should National Insurance be raised to pay for social care reform?

Employers can only pay workers what their work contributes to the business; if the state takes a larger chunk there is less available for wages.

We should consider a long-overdue merging of NI with income tax. This would save money for employers and government but could redress some of the inequities in our overly complex tax system.

It would also make it much more obvious who pays what.

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