On Wednesday (13 March), refused to rule out increasing
income tax to pay for his plans to abolish National Insurance.
The Chancellor refused to rule out the tax hike during a hearing
of the Treasury committee in Parliament, despite last week
committing to abolishing the tax during the next Parliament
without funding the commitment.
If the tax burden was to shift to income tax,
Pensioners could face a £800 tax hike under Rishi Sunak’s plans
to scrap national insurance, according to new analysis
commissioned by the Labour Party.
Last week, the Chancellor announced the Conservatives’
£46 billion plan to abolish national insurance contributions
(NICs). The Conservatives have refused to set out plans for how
they would fund these proposals. However, the Chancellor said on
Thursday the Government was considering “merg[ing] income tax and
national insurance.”
New analysis commissioned by the Labour Party from the House of
Commons Library reveals that replacing NICs revenue with a higher
basic and higher rate of income tax would mean rates of income
tax going up by 8%. That means for a retired pensioner with an
average income of £25,000 from a mix of private and state pension
paying an extra 8% on their income above the £12,570 personal
allowance.
This tax hike would mean pensioners paying £994 more in income
tax – on top of the on top of the £1,000 that Conservative tax
plans are set to hit them by.
, Shadow Chief Secretary to
the Treasury, remarking on Chancellor refusing to rule out increasing
income tax to fund NICs abolition national, said:
“Jeremy Hunt has let the cat out of the bag and
refused to rule out increases to income tax to pay for his
reckless unfunded spending commitments.
“A Tory hike to income tax to fill the £46 billion black hole
they’ve blown in the public finances will leave pensioners worse
off.
“The Tories need to come clean about how they will pay for their
plan or whose taxes will have to go up. Pensioners cannot afford
the risk of five more years of Conservative economic chaos.
needs to show some strength
and call an election.”
Ends
Notes:
Transcript of Jeremy Hunt’s comments at the
Treasury Committee (13 March 2024) beginning at 16:01:28
KM: The HOC Library said that merging NICs and Income Tax would
require an 8% increase in the basic and higher rates of income
tax. Would you like to use this as an opportunity to say
categorically that you wouldn’t raise income tax in order to
bring this policy to fruition?
JH: We want to deliver this policy by reducing NI. That is our
stated plan and that is the way we have done it in the last 2
fiscal events.
KM: So not through raising Income tax?
JH: I have explained how we want to do it. Our objective is to
end the unfairness and reducing NI is the way we intend to go
about it.
