UK Chancellor signals the end of the payroll tax

Telegraph ^ | Mrch 7 | Story by Ben Riley-Smith

[RandFan]

Jeremy Hunt has revealed an ambition to abolish National Insurance (the payroll tax) for workers as a centrepiece of the Conservative re-election bid.

In his Budget speech on Wednesday, the Chancellor criticised “double taxation” by income tax and NI, vowing to “end this unfairness”.

He lowered the rate of employee NI from 10 per cent to eight per cent from next month, benefiting 27 million workers and matching a similar 2p drop in the autumn.

Downing Street and Treasury sources confirmed that the aim was to get rid of the employee element of NI entirely, suggesting it could be a key manifesto pledge.

No schedule for the radical ambition was given, and it would cost around £50 billion – drawing scepticism from policy experts over whether it would be realised. But it appeared to open up an immediate dividing line with Labour. A Labour spokesman declined to match the goal, saying: “We will comment on policy, not weird commitments designed to give a bit of a lift to a Budget which does seem to have been a bit of a damp squib for some of his backbenchers.”

[RandFan]

Wow this is interesting and while only a goal the fact that he's talking about abolishing a tax like this must be welcomed?

[monkeyshine]

Not sure what this is exactly. Sounds like a special tax taken from paychecks to cover costs of their NHS system. We don’t have such a tax but we have others we should certainly debate getting rid of. While I think we should not deduct any taxes from paycbecks, to start let’s debate getting rid of the employers contribution portion of the payroll tax for example. Employers should give their employees an apx 8% pay raise instead of remitting their matching payroll tax it to the treasury.

I have other pet peeve issues that I’ve given thought to solving. One day I’ll expound on them further but one that bugs me is insurance. We now have Obamacare so nearly everyone has some form of health insurance. So why should we need additional health related insurance for workers compensation and car accidents and slip and fall liability. It’s all the same health care regardless of how the injury occurred. They just argue about who should pay for the care. I say get rid of the health care component from these liability insurance plans - they should be covered by primary health insurance plans regardless of the cause of injury or illness. Liability for loss of income and retraining seriously injured workers would be a separate insurance, but the health care component should just be covered by health care plans. We would generate great efficiencies and great savings with this one small change. Doctors would only bill health insurers for health care, and auto and liability type premiums would come way down. It might wash a bit overall as health insurance premiums might rise a bit; but there are efficiencies in the administration and simplification and by removing the profit component of 2 of the 3 main types of insurance.

[Mr Radical]

He talks big but it’s all a con-trick.
While he’s reducing this particular tax called NI Contributions, everywhere else he’s pulling in more in tax which will more than make up the difference. For example, tax-free allowances on Share Dividends, Capital Gains, and even what you can make by selling your old stuff on ebay, are being cut by 50%. Most importantly, tax bands - your income before you start to pay tax - are frozen yet again and will remain frozen for years to come; taking inflation in account, this represents a big tax hike every year which especially hits every person on a low income, including pensioners, as well as the low paid workers.

If he was genuine then he would begin by increasing the starting amount for paying tax at least in line with inflation.

[Winniesboy]

Not sure what this is exactly. Sounds like a special tax taken from paychecks to cover costs of their NHS system

It's more than that. The National Insurance scheme, with compulsory contributions from everybody in employment, was set up after WW2 as the funding instrument for the new welfare state - not just the NHS, but the State Pension, unemployment benefits, disability and sickness benefits etc etc. In recent years all of these have been partially funded by general taxation also, so the distinction between National Insurance and taxation has become increasingly blurred.