NI rate rise for 25 million brits planned.

[SydneyRover]

I would happily pay more tax to create a better world for others but find it annoying and demoralising when we see how much money is wasted by successive governments. It seems at times that it is just expected and accepted by those in power.o

It's quite interesting to see how many support this kind of stance Idler and yet the tories whom usually leave the country in more debt are the party that steadfastly refuse to increase taxes. Their latest manifesto said no increase in taxes, NI or VAT.

[wilts rover]

Wait up chaps - I've had an idea

[Sprotyrover]

If you have more money than you need there is nothing wrong with you choosing a Charity of your choice,Cancer Research etc and donating money, that's what I do and I know that the money is being used in a way that is benefitting others. Just make sure you have enough income etc for your own care things can go wrong health wise very quickly when you are older,and again if you are in a position to pay for your own care you are benefiting others less fortunate.
My neighbours wife went into care and it is costing him £800 per week.

[silent majority]

  I would increase air passenger duty, and for long haul flights and first class massively, and introduce a similar tax on cruises.

Not sure why you would choose that option selby, it would just make the average guy in the street more miserable because he can't take his wife and kids on holiday and won't raise that much money anyway.

[hstripes]

I would in theory be in favour of an increase in tax to specifically fund the 'social care' crisis which is looming given our ageing population.

However I would not be in favour of an increase in NI. As argued by others on here it is a regressive tax. Will the 2% rise also be applied at the higher rate I wonder?

Now though is not the time to raise taxes. We are in the middle of an economic recovery after the pandemic. Like most recoveries in this country it is being fuelled by consumer spending. An increase in taxes now could choke off some of the recovery.

By all means put in the extra expenditure now but delay the tax rise until the recovery is complete, especially given how low interest rates are right now. In terms of tax take this may even be optimal given the link between tax revenues and economic performance.

[ravenrover]

Soeaking purely from a personal point of view, I have not paid NI since I retired nearly 20 years ago at 51. With my pensions I am comfortably off and would have no objection to paying NI. Perhaps it should be levied on anyone with a retirement income of say over 30k would that be fair? I think so

[mugnapper]

Wait up chaps - I've had an idea

I'm surprised no one on the Opposition benches mentioned that lie when the Clown was justifying it in Parliament!

[Metalmicky]

Soeaking purely from a personal point of view, I have not paid NI since I retired nearly 20 years ago at 51. With my pensions I am comfortably off and would have no objection to paying NI. Perhaps it should be levied on anyone with a retirement income of say over 30k would that be fair? I think so

  I would increase air passenger duty, and for long haul flights and first class massively, and introduce a similar tax on cruises.

Not sure why you would choose that option selby, it would just make the average guy in the street more miserable because he can't take his wife and kids on holiday and won't raise that much money anyway.

Agree - bit baffling to tax travel to support social care. 

Whatever is introduced, I hope that it is fair to all.  I'm guessing it will be some sort of tiered system with higher payments to the well off - who ironically probably have private medical care - and lesser to those in low paid jobs.  Those on benefits will obviously be exempt.  I hope there is some sort of contribution from the pensions of those who are retired and comfortable - again perhaps somehow tiered to protect those who are elderly and still struggling. 
Whatever is announced there will obviously be outcry's from some who will feel it is unfair - although it is without doubt something that needs to be addressed. Let's see if Boris can put forward a plan..... 

[big fat yorkshire pudding]

That's the problem with ni, those earning over 50k proportionately are hit less and that doesn't sit right with me. They should just have added to income tax which is much fairer.

[mugnapper]

That's the problem with ni, those earning over 50k proportionately are hit less and that doesn't sit right with me. They should just have added to income tax which is much fairer.

The Tories have never been about fairness. They have always expected the many to subsidise the few. And the few keep voting them in!

[drfchound]

That's the problem with ni, those earning over 50k proportionately are hit less and that doesn't sit right with me. They should just have added to income tax which is much fairer.

The Tories have never been about fairness. They have always expected the many to subsidise the few. And the few keep voting them in!

Would there be enough of the few to vote them in if some of the many didn’t vote for them as well though.
I might be wrong but it does seem logical to me.

[big fat yorkshire pudding]

That's the problem with ni, those earning over 50k proportionately are hit less and that doesn't sit right with me. They should just have added to income tax which is much fairer.

The Tories have never been about fairness. They have always expected the many to subsidise the few. And the few keep voting them in!

You can't just limit it to the tories, Gordon Brown as labour chancellor did the exact same thing 20 years ago.

[glosterred]

That's the problem with ni, those earning over 50k proportionately are hit less and that doesn't sit right with me. They should just have added to income tax which is much fairer.

The Tories have never been about fairness. They have always expected the many to subsidise the few. And the few keep voting them in!

This few must be the majority as they wouldn’t be in power otherwise

[normal rules]

1.25% rise to NI just been announced.

[Filo]

NI also funds the state pension, I bet theres no rise there though, theres already rumours of the Triple Lock being abolished because the next rise in April will be a big one

[big fat yorkshire pudding]

NI also funds the state pension, I bet theres no rise there though, theres already rumours of the Triple Lock being abolished because the next rise in April will be a big one

Not at all correct.  It went up 2.5% this year and even with the change it would be 2.5% next.  This is the problem with the triple lock (which is flawed).  Last year the 3rd element general wage growth was tiny due to Covid so not a factor.  That impact is now reversed so becomes a huge growth this year.  Hence why it is flawed as it has no statistical smoothing.  There's other methods they could use but the single year viewpoint makes it completely volatile with no safeguard for an odd year (such as this).  Thus essentially pensioners could get a huge 8-10% increase because of the recovery in the general population when they never had that hit in the first place.

This is a good summary below'

 

How State Pension was uprated

Which part of the triple lock kicked in?

April 2012 5.2% Inflation (CPI)

April 2013 2.5%Guaranteed minimum

April 2014 2.7% Inflation (CPI)

April 2015 2.5% Guaranteed minimum

April 2016 2.9% Average earnings

April 2017 2.5% Guaranteed minimum

April 2018 3% Inflation

April 2019 2.6% Wage growth

April 2020 3.9% Wage growth

April 2021 2.5%   Guaranteed minimum

[BillyStubbsTears]

For the record, I entirely agree that we need to raise tax to pay for social care.

But this, coming from a Govt that campaigned only 20 months ago saying they would not raise taxes this Parliament is a breathtaking breaking of a promise.

I guess we can ignore the next Tory manifesto, because it clearly means nothing.

And just consider the furore if Corbyn had won in 2019 by promising not to raise taxes, then proceeded to raise taxes on the poorest workers within 2 years.

[albie]

Yes, a tax increase is fine provided that it is not regressive.

NI is the least suitable method of raising this resource, because of the way the burden falls on the young and the low waged.

Income tax would be fairer across the board, but in the broader consideration there needs to be a wealth tax on the top echelon to return resources to social provision.

[Monkcaster_Rover]

In an ideal world the folk who were furloughed should be affected by the rise & the poor buggers who worked through it all, shouldn't be affected.

I was furloughed, by the way!

Fully aware that it doesn't work that way, mind.

[big fat yorkshire pudding]

For the record, I entirely agree that we need to raise tax to pay for social care.

But this, coming from a Govt that campaigned only 20 months ago saying they would not raise taxes this Parliament is a breathtaking breaking of a promise.

I guess we can ignore the next Tory manifesto, because it clearly means nothing.

And just consider the furore if Corbyn had won in 2019 by promising not to raise taxes, then proceeded to raise taxes on the poorest workers within 2 years.

Covid is a fair excuse which most will accept, but it's not a very conservative policy to increase taxes.

The interesting aspects are in the details;

1. The impact on businesses at employer contributions go up too - for those not familiar the employer pays NI as well as the amount we see deducted from our payslips, it's something like 13.8% off the top of my head.

2. It appears to be accross the board so applies above the 50k threshold too.

3. The impact vs an income tax hit is actually thus stronger.  Because of point 1 the employee would pay less tax than an income tax hit in theory as the government would have had to raise taxes by more - that's a fair point, but you could argue various other income tax changes could have achieved something similar.

Granted what this likely will do is see lower wage rises as that's how employers will claw it back (an accountant when making these decisions doesn't look at net wages but full gross cost) - the hit is seen more in higher paid employees too.  This could breed a problem of below inflation wage increases over the next year or two.  Ironically this change just reverses a lot of the gains in personal allowances we've seen over the years.

[BillyStubbsTears]

COVID has nothing to do with this, and if the Govt try to use that as an excuse, they are deceiving.

COVID is a short term hit to the finances, which is addressed by temporary increases in borrowing. Care costs are semi-permanent increases in current account costs and have to be paid from taxation.

The thing is, EVERYONE with an ounce of understanding of this issue has known for years that taxes would have to rise to sort out the care system. In their 2019 manifesto, Labour set out what it thought the costs and the necessary tax increases would be. The Tories said there would be no increases in income tax or NI.

Politicians eh? They are all the same aren't they?

[big fat yorkshire pudding]

COVID has nothing to do with this, and if the Govt try to use that as an excuse, they are deceiving.

COVID is a short term hit to the finances, which is addressed by temporary increases in borrowing. Care costs are semi-permanent increases in current account costs and have to be paid from taxation.

The thing is, EVERYONE with an ounce of understanding of this issue has known for years that taxes would have to rise to sort out the care system. In their 2019 manifesto, Labour set out what it thought the costs and the necessary tax increases would be. The Tories said there would be no increases in income tax or NI.

Politicians eh? They are all the same aren't they?

It actually does, the new legislation doesn't actually pay for care in the next few years, that's worth noting.  They could also argue the money for this was there but spent (wasted in some cases) in other ways on Covid.

Again I'm not necessarily in favour of this increase given the continued wastage by government which now has the state at the largest size in a generation.

[Herbert Anchovy]

I don’t pretend to know much about tax, however from what I understand here, the people who weren’t entitled to support during the pandemic ie Company Directors, are now being asked to pay increased tax on share dividends?

[albie]

So where does this leave the so called pay rise for NHS staff?

The increase in NI will eat into the minimal increase given to NHS staff after Covid, alongside the fall in value due to cost of living increases.

Give miserly with one hand, take back with the other.
This will do nothing for staff morale and recruitment to the sector.

[drfchound]

Yes, a tax increase is fine provided that it is not regressive.

NI is the least suitable method of raising this resource, because of the way the burden falls on the young and the low waged.

Income tax would be fairer across the board, but in the broader consideration there needs to be a wealth tax on the top echelon to return resources to social provision.

I’m with you on this albie.
An income tax rise would be fairer and the extremely well off wouldn’t notice a bigger hit to them than the average person would.
On other points being raised, of course covid costs have made a difference to that promise by BJ.
It has undoubtedly changed the governments plans and they have had to fund stuff that they couldn’t possibly have been able to factor in at that time.
The triple lock potential high increase could also be solved by government limiting it to say 2.5% or thereabouts so that it can continue in future years.
Those people who are whining about the young paying the older people’s pensions should also remember that today’s pensioners were doing the same thing throughout their working lives too.
Hopefully, one day, they will get the benefit of the same system.

[BillyStubbsTears]

BFYP
The point I'm making is that we will still need to pay large amounts for care costs every year, well after COVID is a far distant memory. Essentially COVID is a big one-time capital cost, whereas care is a big permanent, annual current cost. You can pay for capital costs through long term borrowing, not through tax income. You have to pay current costs through tax income. So conflating the two is calculated to deceive. But it does sound superficially plausible.

[Draytonian III]

1.25% rise to NI just been announced.

So if you earn minimum wage of roughly £300 you are paying £3.75 extra which is about the price of pint, but if it’s helping the health service I’m all for it .
 No doubt there will be the usual suspects upset with my opinion, but it is my opinion

[albie]

So where does this leave the so called pay rise for NHS staff?

The increase in NI will eat into the minimal increase given to NHS staff after Covid, alongside the fall in value due to cost of living increases.

Give miserly with one hand, take back with the other.
This will do nothing for staff morale and recruitment to the sector.

As a follow up, it looks like inflation is going towards 4% this year;
https://www.theguardian.com/business/2021/aug/05/bank-of-england-uk-inflation-interest-rates-prices

So the NHS pay rise of 3% is reduced by the NI increase to 1.75% before inflation.

Add in the 4% forecast for inflation, and the pay rise for NHS staff is actually a real terms pay CUT of 2.25%, for some of those on low pay to start with.

In what world is that reasonable or fair?

[BillyStubbsTears]

No Draytonian because you don't pay NI on the first £184 per week wage.

So the person earning £300/week will face an additional bill of 1.25% of £112 which is about £1.40.

Of course, someone earning £1500 per week pays a lot more NI. But what really matters in fairness of taxation is not how much you pay, but what you pay as a proportion of the money that is left each week when you've put a roof over your head, shoes on your kids' feet and food on the table. And in that sense, increasing NI hits the lower paid workers far harder than it hits higher paid ones. And it doesn't hit people who earn without being employed at all (people who live off investments or rental income) because they don't pay NI. This is a massively unfair way to heap the burden onto workers and protect the comfortably wealthy. But it really was ever thus from the Tories.

[BillyStubbsTears]

For example someone who owns and rents out a dozen houses and lives off that income will not pay a penny to the new care sector costs because they don't pay NI on their rental income. Their care costs will be subsidised by hospital cleaners and call centre workers who WILL pay the increased NI.