Will Boris Johnson will break his manifesto pledge not to increase National Insurance in order to pay for social care in England?

NI is a regressive tax which is disproportionately loaded into the poor and young.

No prizes for guessing that this nasty government would raise NI

I’ve been self employed at various points of my life, and never fiddled the books as some people have inferred we are all doing. If you claim for things you aren’t entitled to claim, you are leaving yourself wide open should you ever be audited. My other friends who are self employed are equally careful about what they claim and er on the side of caution.
What we should be worried about are big businesses not paying tax, like Amazon and Facebook. Easier to offer a cheaper product when you don’t have to pay any tax, and undercuts the prices charged by U.K. businesses who do pay a fair wage and pay their taxes.
Being self employed is to be always vulnerable, no sick pay, dental plans etc. I think this new tax idea floated is a bad idea, I hope they see the strength of feeling against it this proposed tax and reverse their decision.

Casdon

The material point is that if Boris knew that in order to improve social care he would have to raise taxes (of whatever kind) he should have said so in the manifesto surely, rather than knowing he would have to break one of his pledges or the other?

I am pleased that something is being done, although it would have been better done via tax increases. The point for me, however, is that the promises made at election time is what gets people elected, and (more importantly still) what stops the other side getting elected.

Raising taxation is a key plank of Labour policy, as is spending on welfare, and since the beginning of Covid this government has spent 'unprecedented' amounts on furlough, business grants and so on, and is now talking about raising taxes. Labour voters wanted these sort of policies and were outvoted by those who didn't. The Tories have basically got power (and the Brexit that is causing so much hassle) with Labour policies.

That's the material point for me.

Totally agree Doodledog. Labour are in power in Wales, and were absolutely clear about the need for higher taxes to pay for improvements to social care in their manifesto. No ambiguity, and they were still elected, most people appreciate honesty.

Whitewavemark2

NI is a regressive tax which is disproportionately loaded into the poor and young.

No prizes for guessing that this nasty government would raise NI

I agree that the tax that should be raised is the normal taxation opposed to NI. However that would still entail breaking a promise so as Casdon points out, this is what should have been said in the manifesto. Then all taxpayers would have paid, myself included, which means it would have been difficult to set one age group against another if all age groups were paying. Only the poorest pensioners would not have paid.

Labour are clear that they will raise taxation, but nonetheless they dodged the social care funding issue just like the Conservatives. No government has been brave enough to grasp the mettle with this situation.

Whitewavemark2

NI is a regressive tax which is disproportionately loaded into the poor and young.

No prizes for guessing that this nasty government would raise NI

So.....would you have the young and the poor ( presumably you mean lower paid workers, also receiving UC) pay no or little NI?
Also by saying ‘the young’ do you count all the millions of thirty and forty somethings all in well or reasonably well paid jobs?
The government has realised that the population in general has no appetite for increasing income tax but will put up with raising NI for funding social care and the NHS because it all comes under ‘health’. It could easily come from income tax (funding social care) but wouldn’t be received well by the man in the street.

I'm sorry to point out the obvious but it's got to be paid for somehow, so hopefully between all these people we have voted to represent us, they'll come up with something fair and sensible

It’s not true that Labour aren’t grasping the nettle here maddyone.
www.bbc.co.uk/news/uk-wales-politics-57470082
Power is limited as the Senedd can’t raise taxes independently, but within the powers they do have are going it alone to tackle the issues.

Smileless2012

The amount of dividend that can be taken tax free for business owners, providing a profit was made, has been gradually reduced over the past few years and is now £2000 per person.

Smileless, I think you have over simplified, you get the £12,570 personal allowance. If the business owner takes a small salary and the bulk of his pay as dividends, the first £2k of dividendsis tax free, the next £35,700 is taxed at 7.5% the remainder is taxed at 32.5%. fwiw there are no NICs payable on dividends either so there is a huge saving over the person on PAYE. If the salary is carefully balanced I think you can be paid a mix of salary +dividends of £50,450, pay nothing on the first £14, 570 and 7.5% on the rest, which in my book is somewhat better than PAYE

Here are the steps to take to calculate the dividend tax owed during the 2021/22 tax year – for a company owner paid a £12,570 salary, and drawing down £50,000 in dividends.

The first £12,570 of income is tax-free (the personal allowance)
The first £2,000 of dividends is tax-free (the dividend allowance)
The next £35,700 of dividends are taxed at the basic dividend rate (7.5%) = £2,677.50
The final £12,300 of dividends are taxed at the higher dividend rate (32.5%) = £3,997.50
In this example, the total dividend tax payable is £6,675
I'm not an accountant but I reckon you'd save £3,325 on tax and also a considerable amount of money on NICs

lemongrove

Whitewavemark2

NI is a regressive tax which is disproportionately loaded into the poor and young.

No prizes for guessing that this nasty government would raise NI

So.....would you have the young and the poor ( presumably you mean lower paid workers, also receiving UC) pay no or little NI?
Also by saying ‘the young’ do you count all the millions of thirty and forty somethings all in well or reasonably well paid jobs?
The government has realised that the population in general has no appetite for increasing income tax but will put up with raising NI for funding social care and the NHS because it all comes under ‘health’. It could easily come from income tax (funding social care) but wouldn’t be received well by the man in the street.

Most lower paid workers (ie in the bottom 20%) don't receive Universal Credit. Working people start paying NICs on £9,564 a year, which is below the income tax threshold.

I don't think the "man in the street" is stupid enough not to realise that raising NICs is just another form of tax, which on a sliding scale affects people on lower incomes disproportionately and is only paid by people below state pension age. It's also not paid on rental income or interest from investments.

NI has completely changed from its original intention, which was to provide from cradle to grave insurance for the population.

When it was first conceived everyone paid a fixed amount into a health insurance scheme, but back in the 70s it was changed to being based on how much you earned in PAYE. Clearly there is immediate issues with the way this was administered.

Everyone pays NI at 12% as opposed to income tax. This means that everyone pays the same rate regardless of income. Employers also pay a contribution of about 13% so this means that NI is in effect a tax of approx 25%
Once your salary hits £50k you only pay 2% on anything above that, so it is quite clearly a regressive tax that hits the poor the hardest.

The reason that people seem willing to continue to pay such a high % of their salary under £50k is because most people still think that it is safely put aside for hospitals, pension, etc etc.

The money goes into what is called the NHS fund. Since the 90s this fund has been in surplus - I know! Who would believe it?- which has been lent to the government in the form of gilts, to use as it thinks fit or not so fit in the case of the £37bn etc.
Only 20% of the total we pay in goes towards the NHS. So in effect our NI contributions are largely used by government for anything other than what it was intended for.

Scrapping it is much more complicated than would first seem however, as paying for it qualifies us for our pension, maternity allowance and other benefits.

We could accept that it is actually another form of income tax and reform it to mitigate the burden on the poor.

There is a long overdue need to reform our tax system.

Oh I should have said
With thanks to C Paice of Adams Institute.

Yes, the 'man in the street' is perfectly capable of looking at his (or her) payslip and seeing how much the take-home sum has risen or fallen.

There is a ceiling on NI - will that remain, or is this money going to be a separate amount that goes through that ceiling?

I think there is a lot of so-far hidden detail that we need to know about this before we have anything like the full picture.

Casdon Tony Blair’s government said they would reform social care. They didn’t, and so they failed to grasp the mettle.

I was talking about the current position, where the Welsh Government is taking action, but I’d agree with you maddyone Tony Blair didn’t resolve it - but he left office in 2007, and the Tories have been in power since 2010, so they have had 11 years to sort it out. It’s the unfulfilled promises that’s the most frustrating element.
This makes sobering reading
www.ageuk.org.uk/latest-press/articles/2021/ten-wasted-years/

It is an obvious point, but one that Johnson seems to have missed until today. I would also be happy for an increase in income tax, but then I didn’t vote for his manifesto lie.

He stood on the steps of Downing St two years ago and said “… [we will] fix the crisis in social care once and for all with a clear plan we have prepared ”. Unless his definition of ‘clear’ and ‘prepared’ includes ‘uncosted’ then this must have been taken into account when making the manifesto pledge. So he was either lying about his plan, or lying in his pledge. For what it’s worth I think he was lying in both of them.

And before anyone comes up with “… but Tony Blair did so-and-so” we all agree, but that doesn’t give Johnson a free pass. In fact, it seems to be a recurring thread here that people broadly on the left are able to see that left-wing governments have frequently fallen short, but that people broadly on the right just seem to think that Johnson walks on water and can do no wrong.

If you’re talking about me Petera, I certainly don’t think that ‘Johnson walks on water and can do no wrong.’ I pointed out in a post up thread that all governments since the Blair government have said they’ll fix the social care situation and all have failed. That means Blair, followed by Cameron, followed by May, and now we have Johnson. No one has been successful because it’s such a difficult subject. Will this latest initiative succeed? Well we’ll have to wait and see, but plenty of people won’t like the possible solution, and plenty more won’t like leaving things as they are. Meanwhile many more little old ladies will continue to sell their houses to pay for their care. Some houses will be worth millions, and others little over one hundred thousand, but sell them they will, because the NHS will provide everything if they get cancer, but nothing if they get dementia or heart failure that leads to them needing care.

And if the little old lady who has heart failure which leads to her being unable to walk to the toilet unaided, unable to shower or dress herself unaided, and unable to get into or out of her bed unaided, then if she has no house to sell, or savings, then the state will pay for her to be cared for in a care home, but if she has a house to sell she needs to pay for her care. Cradle to grave care, I don’t think so.

I haven't read the full thread, so apologies if this has been said before.

I'm ardently against private healthcare, however if somebody is sitting on a valuable house that they will never live in again, I don't think its unreasonable to expect that person to sell the house so that their living expenses are met.

My house is not worth anything like a million pounds, but at some point I do expect to sell it and use the profits to live on.

If you read the thread, Alegrias you will see that of course that has been said before, and you will see how people feel on both sides.

Petera, I agree with everything in your post. Whether or not you (or me, or anyone else) agrees that this is necessary, Johnson got in on false pretences. IMO if a PM plans to break a key election pledge they should have to call another election. If the population feels that they had no choice because of circumstances they will make allowances, but if they feel that the tax rises (or whatever the change has been) were what put them off voting differently, and now that we are getting them anyway they would rather have 'the other lot', they have a chance to take that known.

This is being discussed on the Jeremy Vine programme now.

Well Johnson certainly lied about having a plan ready to go. I don't accept the excuses given out about it being about the pandemic slowing it down. That could slow down the implementation but it is clear he never had a plan.

Can't stand liars, can't trust liars.

maddyone

Casdon Tony Blair’s government said they would reform social care. They didn’t, and so they failed to grasp the mettle.

And he isn't PM anymore, unfortunately Johnson is.

I think it is entirely understandable if he breaks his election promise. The last two years have been exceptional and with such high borrowings where else can they raise the funds needed? Glad I don’t have to try to balance the books!