Does the Government think that punching everyone in the face means no one will complain?

No, it's not fair, but the turkeys who employ these methods of reducing their overall tax burden are never going to vote for Christmas.

PS. It's not just the big corporates which aren't paying their fair share of tax. There are millions of people in the UK who employ the methods you cite Dinahmo.

If it is necessary that there should be tax increases it should through income tax and not NIC. There are some groups of people who don't pay NIC or pay a tiny amount, even if they are working.

Many small private companies pay their Directors a salary just above the threshold for NIC and the rest is taken by way of dividends. They would pay £51.84 NIC and £2662.50 in tax.

An employee earning £50,000 (not a director) would pay £4852.84 NIC and £7500 in income tax.

Private landlords, if not operating through a property company, would not pay any NIC.

Is this fair?

MaizieD

^Just catching the Sky News Business Review and businesses seem very concerned about the effect of a rise in NI on inflation.^

Why are they concerned, Pippa? Rises in taxation damp down inflation, they don't cause it. We are not in a position where inflation is causing any concern are we?

Thanks for your post at 10.37. You express what I'm trying to get at. State should fund the social care and subsequently tax if needed to to damp any resulting inflationary effect.

I can see where businesses are coming from. The rumour is they will be expected to contribute more to NICs too, which will lead to price rises, which will lead to employees wanting wage rises. Taxation can't solve that, if people are already struggling. It only works if there's excess money floating about, which there is for a handful of people, but not the majority. With NIC increases, the wrong people are being taxed.

If focus groups are in favour of increased NICs, I'd like to know how the "problem" was framed, who was in the focus groups and whether people really understood the issues. It's anecdotal, but from what I've seen on Twitter and on other social media, there is strong feeling against raising NICs.

PS. I think it would have to be a flat payment (ie the same for all) with some arrangements for people receiving particularly low incomes.

Maizie HMRC doesn't have any problem collecting tax from occupational pensions. The tax deductions kicked in for the first payment after I received state pension. It would be a bigger problem collecting tax from rental and investment income.

Wondering where the money goes ? I read in the Times that a
Test and Trace company is paid £50m a month.
" One of the companies running NHS Test and Trace has been paid almost £50 million a month by the Department of Health this year "It goes on to say that the company's profits have soared.
Yes , it's Serco.

Just catching the Sky News Business Review and businesses seem very concerned about the effect of a rise in NI on inflation.

Why are they concerned, Pippa? Rises in taxation damp down inflation, they don't cause it. We are not in a position where inflation is causing any concern are we?

Thanks for your post at 10.37. You express what I'm trying to get at. State should fund the social care and subsequently tax if needed to to damp any resulting inflationary effect.

Just catching the Sky News Business Review and businesses seem very concerned about the effect of a rise in NI on inflation.

Obviously, the dinosaur that is R Sunak, led by the Treasury, will want to bring in more austerity - the very opposite of what will work!!!

PippaZ

I'm not sure any of the Labour leadership of that time are members of GN maddyone

Maizie Of course you are right. The government could just decide to plan, organise and fund. Sadly, they are not that sort of government though. Having funded it, should we see inflation becoming worrying it would make more sense to tax the wealth that is slushing about in the system rather than the day to day money used for living. That would take the steam out of the market and calm any issues down.

….May’s plan for social care was much fairer….

Yes, it was.

…. I never could understand why Labour objected…..

Neither could I. Perhaps someone on here could enlighten me.

I do wonder how Scotland and Northern Ireland (not sure about Wales) can afford to pay for care in old age, but England can’t.

The governement we have at the moment is not interested in helping the people of Britain, only in feathering their own nests. They have got away with funnelling vast amounts of money to their friends for non-existent/not fit for purpose services, in the middle of a pandemic, adding to the national death toll.

We've allowed them. They think they can do anything and are invincible. And they more or less are.

It really does look as if the Government thinks we will be satisfied if everyone takes a hit and no one gets anything out of it.

But everyone isn't taking a hit, are they?

National Insurance is a regressive tax. It falls most heavily on the lower band of earners. There is a cap on the amount charged on earned incomes over £50,000 (which is not an uncommon income these days) and the more people earn over that amount, the less NI is paid as a percentage of income. And people with unearned incomes don't pay it at all. Is the assumption that they never use state welfare services?

I think that the rationale for an increase in NI is that it is easily collected from earned income through the PAYE system. If it is extended to pension income I can see that it can easily be collected by deduction from the state pension, but what about private and occupational pensions?

But, as you all know (and are bored silly by) taxation doesn't fund spending; that is a convenient lie that justifies ill thought out initiatives such as this and will justify the planned return to austerity.

In answer to Baggs' question, it should be state funded and the state will get returns from the increase in economic activity which would result.

www.taxresearch.org.uk/Blog/2021/08/15/the-multiplier-shows-that-not-all-government-spending-is-equal/

(P.S I have read this morning that the NI increase is informed by focus groups. I would prefer government decisions to be informed by sound economics)

Pensioners and older workers should expect to contribute as well.

This is not what they were saying on "Today". Of course they could be completely wrong but they only mentioned older workers paying NI. You could say pensioners will be paying by not getting the tripple lock - the point of which was to "level up" state pensions.

eazybee Do you have a source for an expectation that everybody will contribute?

Ironically, May's plan for social care was much fairer. It would have meant that people had to pay for social care but were guaranteed to be left with a a certain amount (£100k I think). This would have benefitted people with low value property more than those with higher value property. I could understand why some Tory backbenchers went mad about it, but I never could understand why Labour objected. I came to the conclusion that people didn't understand what was being proposed.

If the plans which have been leaked today are actually enacted, they are a disgrace. It will mean people on lower incomes paying for the inheritances of the better off. Again, I wonder if people really understand what is being proposed.

I am glad that the expectation is that everybody should contribute, not just those paying National Insurance; Pensioners and older workers should expect to contribute as well.
My father paid all his nursing home care fees himself, from savings and then from the sale of his house, at a time when those paying fees were charged more to make up the short fall of those who did not contribute. He had also supported his mother when she was widowed aged fifty until she died aged 94; she spent three months in a nursing home.

Nearly everyone will need some form of social care as we live longer; women used to bear the burden of social care but now with most women working until retirement age that is no longer possible, nor justifiable.
The money has to come from somewhere, and taxing the rich, individually and in giant corporations, is another option but one that will be very difficult to achieve.
The morality of tax avoidance and tax evasion is an issue here.

... and watch out for "legally ringfenced". Parliamentary supremacy, which means a parliament can make or unmake any act of parliament, so nothing is ever "legally ringfenced" if a government choses to change it.

The big issue, as I see it, is that this government has not changed in the way Johnson said it would. His big "sell" to the so-called Red Wall area was "leveling up". It seems not only is Johnson and his government "Never Ready" they also cannot change.

They just cannot bring themselves to tax wealth. It all has to be on income. What has changed? Yes, we do desperately need a properly structured, national, free at the point of need, Social Care but what is so different with this other than it hits out poorer people's incomes?

It was the "Never Ready Government" when it came to the long flagged pandemic. It was the "Never Ready Government" when it came to the effects - long flagged - of Brexit. It has been the "Never Ready Government" when it comes to "Leveling up" and it was the "Never Ready Government when it came to Afghanistan. Now it is the Never Ready Government when it comes to Social Care.

There never was a plan so now they appear to be throwing everything (but a wealth tax) at the wall to see what sticks, coming out with ... still no plan until after the next election.

If the tax rises are to pay for social care, isn't the idea that people will get something out of it, especially when very old?

This is a question. It does not mean I think what the government has put forward contains good ideas. But when Mrs May put forward ideas to find some way to pay for social care everyone went mad and she had to drop it. Now these ideas have been put forward and everyone is going mad.

So how should we, as a nation, pay for social care? A lot of it is not very good at the moment and desperately needs new 'blood' injecting into it.