12 Sep
4:56pm, 12 Sep 2024
463 posts
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DaveG
It always seems the obvious place for tax increases is national insurance. Tax rates are sensible - as you earn more the percentage of tax you pay on it increases. National insurance is the opposite - you pay 8% up to £50k, then 2% over £50k. The logic of that never makes sense to me. If you said it was 8% for all income above the base rate, it would generate billions. For a £65k worker it would only increase their total tax/NI bill by £900. But, as employers pay the same, it would generate an extra £1,800 for the government. Given how much of the tax income comes from higher rates (which, are NI lower rates), there is probably an ability to make it 7% for all, not 8%/2% which would be a tax cut for most people but generate more income for the government, whilst also cutting the cost of employing people on less than £50k a year. I've never understood why the lower NI rate for higher earners isn't ever discussed. I also don't see why people of retirement age don't pay NI on income. If you exempted the state pension (like student bursaries are exempted from earnings), and doubled the base rate for people of retirement age, then you would be collecting NI income from higher earning older people with no impact for the majority of older people. That seems like the right balance. |
12 Sep
5:00pm, 12 Sep 2024
25,579 posts
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larkim
Employers NIC already has no cap / reduction for higher earners. It's 13.8% for all earnings over the threshold. gov.uk Think this is commonly misunderstood / presumed. |
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12 Sep
5:03pm, 12 Sep 2024
25,580 posts
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larkim
So in your example above, only the employee would pay more, so only £900 extra for the govt.
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12 Sep
5:07pm, 12 Sep 2024
25,581 posts
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larkim
The heart of that though is the concept that NI is really a tax. Which it is. But so many people think of it differently, as if it's paying into some mysterious pot which earns them "stuff" in the future. There are future benefits (e.g. state pension) which are linked to the amount you've earned and the periods when you've not worked. But there's no reason for NIC to be used to measure that. You could simply have a system where £1 salary = XX points of contribution to pension. But it is politically unappealing to suddenly make basic rate tax appear to be closer to 30% by simply adding NIC to BR tax. So we continue with the pretence that they are somehow different. |
12 Sep
5:56pm, 12 Sep 2024
17,787 posts
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jda
SPR wrote: Party politics does seem to make voting records kind of useless especially given the party discipline conversations we've had on here. I think it's generally agreed that the tories vote like they do because they are all evil conniving bastards whereas labour do because they are constrained by circumstances. Starmerites will no doubt be celebrating his threat - or is it a promise? - to further degrade the NHS. |
12 Sep
6:47pm, 12 Sep 2024
11,628 posts
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Fields
I wonder what ways to fix the NHS a health secretary who has many donations from private healthcare will come up with?
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12 Sep
6:55pm, 12 Sep 2024
4,493 posts
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Cheg
Yeah agreed mash NI and tax together. Might get messy for the oldies who don’t pay NI though. Can always sort through bands and tax codes though.
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12 Sep
7:06pm, 12 Sep 2024
213 posts
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Yakima Canutt
NI was set up to be, as the name suggests, something is different than tax but a payment for the benefits of social security and health service when and should you need it. But it's become disentangled from it's original purpose and now just a part of the pot. Denmark got rid of national insurance and just limped it with income tax a few years back. There is food reason for UK to do the same. Or perhaps take the NHS out from government and have it funded by a levy - bit like the BBC only based on income up to a certain cap. Like a sort of national insurance. Oh my I've come full circle.. |
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12 Sep
7:07pm, 12 Sep 2024
214 posts
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Yakima Canutt
Sorry for the typos.
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12 Sep
9:22pm, 12 Sep 2024
22,011 posts
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Dave W
We did not do impact assessment of winter fuel payment cut, No 10 admits Now that does disappoint me. Bullshit policies just trotted out with no prior research done on their effect or their impact on people just for the headlines was a Tory staple. I thought that Labour would at least look at the effects their policies would have before releasing them. Shame. |
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