Business Monitor
Tax, tax and more tax N
obody likes paying tax. For owners of small businesses that goes in spades because they rarely feel that the system gives them a fair deal, plus they have to tell HMRC what they should pay and pay an accountant to tell them. Little wonder people try tax avoidance and not much wonder that tax evasion happens. This is bad enough until a new tax comes along, especially when it’s an old tax pretending it’s different. The recent introduction of raised demands for National Insurance has got under everybody’s skin, not least because it looks like the government pulling a fast one. Ever since Margaret Thatcher’s time at No. 10 raising income tax has been a no-no. Politicians will bend over backwards to avoid this or to call it anything else.
We the people are not fooled. Call it Eric if you like – we know a tax when it’s demanded. This is a tax to pay for health services and social care. Since both apply to all of us it ought not to be so divisive. The problem starts with the fact that this is a big tax hike. It continues with it being hidden as an increase to NI – shoddy treatment. Then it takes on a new form as social tax levy. It is therefore a tax which will be available for successive governments to cheat us with.
No increase
Along with income tax Boris Johnson promised specifically not to increase NIC rates. It has been particularly stressed that using NICs as a substitute for income tax is especially reprehensible because it hits low earners hardest.
The NI element is also payable by pensioners who are still working. Pensioners didn’t previously pay NI at all. We should all be ashamed of how we’re treating young people. NICs start at £9,000, whereas income tax starts at £15,000. Hence young people who are likeliest to be low earners will pay a disproportionate amount. Sooner or later when they add together all the ill treatment they have suffered, they are going to rise up in revolt. So, all in all the government has managed to upset all the nation’s taxpayers in one go. Nice work Boris!
And it is down to Boris. The plan was his and not the responsibility of Rishi Sunak the Chancellor of the Exchequer, where you might expect the decision to
| 46 | November 2021
have been made. No, this one is Boris’s through and through. His track record says that his get out of jail free card will work its usual miracle.
Still, I ought to give Boris a break. Surely, he would me? The most impressive one-liner in his announcement – and it was true – was that he was happy to break a promise when it was in the national interest and that nobody’s manifesto in 2019 featured a worldwide pandemic. Get out of that one! He also said that his breaking promises would be credible to the people. That’s true but not for a reason he’d like. The credibility came from us knowing that he is an habitual liar.
It should be noted that a series of Prime Ministers, both Conservative and Labour, have looked hard at how you fund social care and then each one in turn has ducked the issue, kicking that particular problem down the street. It is therefore to Boris Johnson’s credit that he has bitten the bullet.
Highly desirable
Note too that he has Rishi Sunak on his side on this one – just as you’d wish Prime Minister and Chancellor of the Exchequer would always be. The evidence, however, says ‘not necessarily’.
It would be highly desirable if this move to new taxes also saw a reform of the tax system. The first thing that we want in our tax system is transparency: employers, employees, the self-employed and businesses should know or be able to establish without difficulty what they are due to pay. In the same way it should be clear or easy to establish what it is spent on. It should be easy for civil servants to administer at the lowest possible cost. I doubt that anybody recognises the structure and workings of HMRC in the
Employees, employers and the self- employed will pay 1.25p more in the pound for National Insurance from April 2022.
But from April 2023, National Insurance will return to its current rate and the extra tax will be collected as a new Health and Social Care Levy.
Currently if you are on an annual salary of £20,000 you will pay an additional yearly payment of £130. For those on £50,000 you will pay an additional £505 each year. People earning under £9,564 a year don’t have to pay National Insurance so won’t have to pay the new levy.
www.printwearandpromotion.co.uk
Back in September, the Government announced an extra tax to fund social care in England and help the NHS recover after the pandemic. Marketing expert, Paul Clapham, shares his thoughts on the upcoming rise in National Insurance.
foregoing. Instead, we have a system that works against risk takers. It should be reformed in a hurry. Above all the system should be simplified.
NICs are just regarded as tax, not serving a different purpose. They should be combined with income tax. Treating unearned income sources differently is a nonsense. The same is true of property taxes.
Boris Johnson could become a very popular PM in one fell swoop by implementing reforms of this type. Who would suffer from such changes? Accountants would probably lose trade as the self-employed decided that they could do it themselves, given it’s now easy and we’re not likely to over-pay. Are you upset at the idea?
What are the new plans?
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