Two lessons that I have learnt about tax and politics this week:
- You can never trust what politicians say about future taxation (not that I did anyway)
- It is stupid for politiocians to make any promises about tax rates in the future as they hold themselves hostage to fortune and it is almost inevitable that they are going to have to break their promises anyway.
So it is with the increase in National Insurance rate by 1.25%. Johnson said that he had a ready plan to fix social care (he obviously didn’t) and he said ‘the kicker’ was that tax rises would not be required to sort the problem (whoops, they have). We should not be surprised that a man that has such difficulties with the truth is found to have lied again.
I’m not complaining that we need to raise taxes. It is obvious that the issues that are facing us, COVID, climate change, and ageing population are all going to cost us money to fix and that the public sector would have a large role to play. All of this requires taxation and I, for one, support the raising of money for public good.
I have never bought into the concept of low taxation but rather fair taxation, where those who can pay more do so. But National Insurance doesn’t work that way. It disproportionately affects working people on lower wages. Very low earners and those unwaged don’t pay any but there is an upper earnings limit currently at £967 per week. Once you earn more than about £50k you don’t pay any more. Also, if you are not in employment yet paying tax it does not affect you. National Insurance is not a fair tax system.
There is also a belief that NI is a good tax, spent on good things, as opposed to Income Tax and VAT. This is not true as it all goes into one big pot. Money, after all, is fungible.
A rise in income tax would have been fairer as it is paid by all who receive over a certain amount, even pensioners.
Perhaps the most worrying thing about this for me, is that I find myself agreeing with Darren Grimes – ‘It is a taxation on the poor.’