National Insurance rise is ‘daylight robbery’ says Sir John Redwood
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Last year, Chancellor Rishi Sunak announced the Government’s plan to increase National Insurance payments on workers and employers by 1.25 percentage points. This latest tax hike is set to pay for the Government’s social care plans ahead of the Health and Social Care Levy which will be introduced. However, MPs passed a motion yesterday (March 8) to scrap the National Insurance rise ahead of it being implemented in April.
Labour is arguing the Government’s policy decision will worsen the cost of living crisis and cost families around £500 a year.
Critics are taking particular aim at the increase to National Insurance payments in light of soaring energy bills, which are set to get worse for households due to Russia’s invasion of Ukraine.
A motion introduced by Labour in the House of Commons called on Boris Johnson to scrap the rise, claiming it was approved “on the nod” without a formal vote.
This means that it passed a Commons vote but is a non-binding course of action which Mr Johnson does not need to act on.
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The motion stated: “That this House calls on the Government to cancel its planned 1.25 percentage point rise in National Insurance Contributions that will cost families an average of £500 per year from April 2022.”
In the House of Commons, the Government defended its position and cited the potential benefits of such a tax increase.
Speaking to MPs, Treasury Minister Simon Clarke said: “This is a transformative policy that will tackle serious and longstanding issues.
“To fund such a significant increase in permanent spending, we have had to make a tough but responsible choice to increase taxes.
“Only a broad-based tax like income tax, VAT or National Insurance can raise the sums needed for such significant investments.”
In response to the Government not listening to the concern of MPs regarding National Insurance, Labour’s Shadow Chancellor Rachel Reeves pleaded with Rishi Sunak to change his course of action.
Ms Reeves said: “The Chancellor must show some understanding of the real-world consequences of his policies, on working people and on businesses.
“The Spring Budget will take place two weeks tomorrow on March 23. If the Government can’t commit to halting the national insurance rise today that they must make it then.
“Two weeks before it comes in on April 6 and hits working people and employers hard.
“Today is an opportunity for the Conservatives to show that they get it, they don’t want to make the cost of living crisis even worse than it already is.”
Tom Selby, head of retirement policy at AJ, provided a hypothetical example of how households will be impacted by the proposed tax hike.
Mr Selby explained: “Take someone who is employed with total taxable earnings of £30,000.
“In 2021/22 they would pay National Insurance at 12 percent on earnings between £9,568 and £30,000, leaving them with a total NI bill of £2,451.84.
“In 2022/23 the threshold at which employees start paying National Insurance is rising to £9,880, so NI at 13.25 percent above this level would leave them with a total NI bill of £2,665.90.”
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