LONDON, (Parliament Politics Magazine) – According to the health secretary, the rise in national insurance payments for millions of individuals already struggling to cope with the cost of living issue is both reasonable and fair.
Sajid Javid said the additional 1.25 percentage point charge, which goes into effect on Wednesday, is vital to pay for social care and health in the wake of the Covid pandemic.
Despite calls from business groups, unions, and some Conservative MPs to at least postpone the implementation, the government has moved on with its plans to raise national insurance contributions for workers and businesses. A planned amendment that would exempt some of the lowest earners of the country from paying any national insurance contributions will not be implemented until summer.
Javid defended the rise, telling Sky News that the pandemic’s impact has been unprecedented.
When money is spent on public services, whether it’s for the NHS or for anything else, it can only be gotten from two places. Money may be raised directly for people today, that can be done through taxes, or it can be borrowed and essentially the next generation is being asked to pay for it, he explained.
He believes it is appropriate that they pay for what they will use as a country, but that they do in a fair manner. This levy is being raised in such a way that the wealthiest 15% of earners will pay nearly half of it. That, he believes, is the proper approach.
The government has been accused of unfairly burdening lower-income people by imposing a regressive tax, according to critics.
It was the wrong tax at the wrong time, and people were having a difficult time paying their bills. And this was going to have a huge impact on them, said Labour leader Keir Starmer.
Starmer told BBC Radio 5 Live that the government chose to impose the tax on people who work, while exempting those who earn money via property rentals and share dividends.
There were a lot of landlords with a lot of properties who weren’t going to pay a dime extra in taxes. Their tenants who go to work would have to pay more in tax.
Starmer said instead that the overall approach should be that income in all its forms should be taxed equitably, and that he will lay out Labour’s proposal to do so before the next general election, which will be held in around two years.
Ministers have also raised the tax on share dividends by the same amount, albeit this is expected to disproportionately burden small enterprises and sole traders, while having little impact on large-scale stock trading.
