Tring to get my head round the NI increase proposal

[notnowbernard]

But don't really understand it fully

Please explain in a nutshell for me

Labour: increase NI to have to cut spending less ; Con: NI the same but cut spending

Have I got this right?

Don't forget bubbles4 that the Tories also put VAT on fuel as well.

It is their favourite tax.

Partly because it affects the less well off the most and its a stealth tax so people don't really realise that they are paying more.

The NI increase will hit the well-off more and thats why the Tories don't like it.

Its part of their whole policy of giving more money to the rich - like inheritance tax cuts for the 3000 wealthiest estates.

Who would benefit? Most of the Tory front bench who are all in line to inherit ridiculously large amounts and are already uber wealthy.

However you cut the cake, the problem is its not big enough. As a nation we spend more than we earn. We import too much.

Which leads me to think that increased VAT on non-essential goods might be a good thing because it would disproportionately inhibit buying more stuff we can't really afford. VAT shouldn't be put on non-luxury foods etc, and shouldn't be increased on services or domestic fuel, but really why not increase tax - encourage people to get the electrician round to fix the cooker rather than importing a whole new one.

(Im sure this is far too simplistic )

Increasing NI is crazy. It is a tax on jobs because employers will be taxed on their wage bill. The sensible option is to tax businesses on their profits, not on the jobs they provide.

The only reason Labour want to increase NI is because it doesn't have 'tax' in its name, and their supporters somehow won't notice.

MmeBlueberry

I think you are being a bit unfair - I can't think they would increase NI if they could avoid it any other way.

They have already increased taxes on the wealthy and bank bonuses and that has brought in more money but it was either NI or VAT.

We know from history that the Tories would have chosen VAT - they did before and even put it on fuel - Labour chose NI as it has less impact on poorer people.

The Tories NI pledge seems to me to be woolly and unfunded. I think other taxes will have to go up to pay for it and I bet it will be the poorest that will end up picking up the tab.

"I bet it will be the poorest that will end up picking up the tab."

Perhaps it will, but let's not forget that not that long ago there was the removal of the 10% rate of income tax (at least on earned income, I think there's still some instances where 10% is charged)... after a big noise even on the Labour benches that it was wrong...

What happened... some even more complicated amendments were made, to give some categories of people a little bit back, to calm the elderly getting pensions, and some other category.

There was a much simpler way - they could have had the balls to admit "we got it wrong" and just re-adopt the 10% rate, but that would have caused 'egg on face' and rejected.

I think the Lib Dems, with their wish to start income tax only after someone gets 10K is a far simpler idea, and will help everyone.

Anyway, we should get more details during this week, so we will have a chance to soak in what each party proposes and then discuss some more...

I believe that increasing NI is because it doesn't has 'tax' in its name, and because non-workers, who are virtually all Labour supporters, will not be affected.

There are many ways to raise revenue. It really doesn't have to be a complicated system. Governments can play around with the personal allowance and tax rate(s).

Of course businesses should be taxed, but only on their profits, not on the jobs they create. By increasing NI, the government are discouraging the creation of jobs, which is a very bad thing.

It would be a nightmare for non-profit, high employing enterprises, such as the NHS. Their wage bill would go up significantly, and that would mean that patient services would have to be cut.

MmeB - not just NHS, Education (non-University), Police, Ambulance, Fire Service, all the Councils, Court Service, Government departments and bodies (must be thousands of civil servants / scientists/ local government staff, working for DEFRA, Benefits Agency, Employment service, etc) and lots are paid by Quangos, too.

All are funded without "profit" so there will be chunks of that funding going back in NI and not going on whatever service it is meant to.

"They have already increased taxes on the wealthy and bank bonuses and that has brought in more money but it was either NI or VAT"

Or scrapping Trident, or pulling troops out of the Middle East , or scrapping some of the 8 billion spent on overseas aid, or scrapping some of the dumb IT projects which usually end up not working properly, and are overdue, and over budget.

A new aircraft carrier is being delayed (so they don't have to pay 600 million quite so soon, but the breaking of interim contracts will still cost 450 million)... so a saving of 150 million in the short term but overall spending of an extra 450 million.

This Link actually says it will cost an extra 674 million... so I got the figures the wrong way round!

I don't think that ID cards can be scrapped without paying out large sums for breaking the contract (and some of the Government deals never included options to cancel before the end, so a small number of companies {with a record of late delivery and extended contracts to cure 'teething problems'} have something signed on behalf of the public saying they will be paid X00 million pounds with no option in law but to pay). Pathetic.

Indeed, dude.

I work as teacher in the independent sector. School fees will have to go up to cover increased employment costs. That means that families will have less disposable income, which in turn means less money going into the consumer spending and spending within their own local communities.

If you increase minimum wage, it is yet another burden on business and discouragement to job creation.

Businesses should be taxed on the profits they make, so let them make profit. By all means adjust the % of corporation tax to ensure they pay their fair share, but don't impede them before they have made profit.

Two more articles from that same online news service...

National Insurance: The battle over tuppence

and The Tories' deficit disorder

Interesting to see the IFS report acknowledging Labour policies have reduced the inequalities from rising as fast as under the Conservatives, but it is still increasing... and that changes to tax and benefits proposed (in budget) by Labour will cost each household an extra 270 quid. Doesn't look so attractive as a saving of 700 pounds for all but the richest under the LibDems.

Wouldn't it be better if the minimum wage was increased but NI reduced for minimum wage earners to balance - to help get people out of the 'benefits trap'?

Thank you for this thread.

Just marking so that I remember to come back and read when not so tired.