The Daily Telegraph reports that the Conservatives are considered ending National Insurance contributions, combining them with income tax in an integrated ‘earnings tax’. George Osborne actually announced this in 2011. Whatever its merits, there are some obvious practical problems with the idea. National Insurance Contributions are regressive, and levied on workers earning much less than the tax threshold: making up the difference would call for a substantial hike in the headline rate of tax, the sort of thing that political Chancellors tend to shy away from.
There are times when it seems that the Telegraph has a direct line of communication with the Conservatives’ mother ship, but I’m not convinced that this is one of them. There are uncanny similarities between Steven Swinford’s report this month and another one that appeared in the Independent a month ago, written by Nigel Morris. For example, the Independent article writes:
The system of national insurance contributions dates back to 1911 when it was established to help working people insure against illness and unemployment. It was expanded after the Second World War to help fund the health service and wider social security programmes, and is now charged at 12p for every pound of income. It has grown up in parallel with income tax, which traces its roots to the 18th century and is administered separately. But senior Conservatives believe the distinction has become academic, particularly as general taxation is routinely used to meet the cost of the NHS. … In a consultation paper three years ago, the Treasury said the parallel taxes created bureaucracy and added costs for employers. … In a survey in 2011, the Office of Tax Simplification, which is part of the Treasury, found almost unanimous support for the idea.
The Daily Telegraph tells us:
The system of national insurance contributions dates back to 1911 when it was established to help working people insure against illness and unemployment. It was expanded after the Second World War to help fund the health service and wider social security programmes, and is now charged at 12p for every pound of income. It has developed in parallel with income tax, but senior Conservatives believe that the distinction has become increasingly academic as general taxation also funds the NHS. … In a consultation paper three years ago, the Treasury said the parallel taxes created bureaucracy and added costs for employers. … In a survey in 2011, the Office of Tax Simplification, which is part of the Treasury, found almost unanimous support for the idea.
University teachers see this sort of thing all the time, but not, perhaps, in such a public forum.