NI and pensions

Just heard on the radio that the government appears to be trying to bribe voters introducing a plan to end National Insurance contributions.

So, um, what then pays for the NHS? And maybe more importantly, what then pays for the State Pension?

Or is this a stealth way of trying to abolish both? (me? cynical? it’s the Tories…)

As I understand it, they are looking at options to be able to remove NI as a separate tax. I expect that they would be looking at how to merge it into income tax in order to simplify the tax system slightly instead of running two systems. This country really does need its tax regime looking at. Removing the complications should result in less loopholes and save money for the government and the tax return-filling public by making it easier to administer and understand.

Very much so.

General taxation pays for the NHS and Pensions (that and a whole lot of borrowing). Those things haven’t been linked to NI for a very long time.

It’s a sensible move to simplify the tax system (though employer NI is unaffected) – one day we may get to a point where it’s so simple that HMRC understands its own rules without the Supreme Court needing to get involved.

IF they were making general taxation more progressive at the same time, all that about simplifying the system would be fine and dandy. That IF is a very big one, though.

As I understand it, they are looking at options to be able to remove NI as a separate tax.
I expect that they would be looking at how to merge it into income tax in order to simplify the tax system slightly instead of running two systems.

The rich claim back much of the normal tax through various dodges, NI is something that everyone pays as an unvarying percentage of income.
Just think how much the rich can not pay under a scheme where the Tory proposals.

NI is something that everyone pays as an unvarying percentage of income

No. It’s complicated; up to £1048 a month you pay nowt; £1048.01 – £4189 it’s 8%*; above that it’s 2%. Exactly an unprogressive tax – lower rate for the rich than the middle.

• For most categories. See https://www.gov.uk/national-insurance-rates-letters

£1048.01 – £4189 it’s 8%*; above that it’s 2%

I think I’ve managed to sit in the central band my whole working life.
I’d never begrudge the low band the 0%
The upper level need an adjustment to bring them inline with the rest of us – that should fund a few extra beds in the local hospital wherever you are.

I think I’ve managed to sit in the central band my whole working life.

Me too likewise. Most people do.

I’d never begrudge the low band the 0%

Nor me neither – in fact, if tax isn’t negative at the low end, then perhaps NI could be…

The upper level need an adjustment to bring them inline with the rest of us

At least. A proper progressive tax would increase (a lot) in percentage at the upper level(s). As they used to, even in the USA. And don’t let any tory tell you that that’s just sour grapes and the amount of tax the very rich would contribute even at those higher rates wouldn’t make much difference – that would only be true if they (continued to) evade and avoid tax (via loopholes they bribe corrupt politicians to create specially for them). You can tell by the fact the average income is way above the median that there’s A LOT of tax that could be collected from them.