NHS tax is not the answer, says TaxPayers' Alliance

April 12, 2018 11:00 AM

For immediate release


Earmarking taxes for the NHS is "either smoke and mirrors or dreadful policy", says TaxPayers' Alliance
Responding to findings from the British Social Attitudes suggesting support for a hypothecated 'NHS tax' Alex Wild, Research Director at the TaxPayers' Alliance, said:

“Health spending is already running at £425 million per day and the public rightly believe that the NHS needs reform more than extra money. Throwing more money into a poorly designed system will just mean higher pay for staff and lower productivy, exactly what happened in the 2000s when the NHS budget was doubled.

"Earmarking taxes for specific budgets is either smoke and mirrors or dreadful policy depending on how it’s done. A proportion of national insurance contributions are already allocated to the NHS and politicians know full well that this makes absolutely no difference to the size of the NHS budget. It may as well allocate a percentage of fuel duty to the police.

"If the earmarking was more rigid, the NHS budget would be hostage to receipts from a single stream of tax revenue which is more volatile than the overall tax take. This will either leave the health service with less than it budgeted for, or with a surplus of cash that could be better spent elsewhere on things like defence or education."

  • Increasing employees' or employer's national insurance would increase the tax burden to 34.5 per cent of GDP.
  • Philip Hammond is set to become the highest taxing chancellor since Roy Jenkins in 1969-70.
  • If in post until 2021, Hammond will have presided over Britain’s second, third and fourth highest tax years in seven decades.
Sources:
Reform/Populus: NHS Tax Survey
National Audit Office: Measurement of NHS hospital productivity
OBR: Public finances databank
HMRC: Direct effects of illustrative tax changes
 
Year National accounts taxes (£bn) Yield of 1 point increase in employee NICs (£bn) Yield of 1 point increase in employer NICs (£bn) Tax burden with 1p employee increase (% GDP) Tax burden with 1p employer increase (% GDP)
2018-19 724.9 +4.1 +5.6 34.45% 34.52%
2019-20 746.2 +4.2 +5.7 34.47% 34.54%
2020-21 768.1 +4.3 +5.9 34.46% 34.53%

published this page in Press Releases 2018-04-12 11:00:16 +0100