TaxPayers’ Alliance calls for National Insurance to be scrapped, to stop future HMRC fiascos and to promote growth

October 21, 2011 1:05 AM


You can read the full report here


Click here for the complete press release


The TaxPayers’ Alliance (TPA) has called for National Insurance (NI) to be scrapped to make the tax system simpler and more transparent. The need for tax reform has never been more pressing, particularly in light of this week's revelations about HMRC errors.


The campaign group says National Insurance serves no purpose and has set out a package of measures to merge both employers’ and employees’ contributions with Income Tax. The call comes as part of the Treasury's call for feedback as part of its consideration of the integration of the operation of the income tax and National Insurance contributions system.


The TPA is urging George Osborne to announce the move in his Autumn Statement as a key measure to kick-start economic growth.  It would also fit with the transparency agenda that has seen, for example, councils urged to publish all spending above £500 and the Government publish details of all contracts with suppliers. Details of how the reforms could be executed have been laid out in a report that breaks new ground since this issue was last considered by government, when Nigel Lawson was Chancellor of the Exchequer in the 1980s.


The move could significantly reduce the burden on businesses of complying with these taxes, as well as making it easier for people to see exactly how much tax they are paying on their earnings.


You can read the full report here


Click here for the complete press release


The key findings of this paper are:




  • The Government should abolish National Insurance – both for employers and employees. It makes the tax system opaque, complicated and costly yet serves no purpose that could not be fulfilled by the Income Tax system. Abolition would make it simpler, cheaper and more transparent

  • Pensioners, the self-employed and others who pay reduced rates of National Insurance should not pay more tax when it is merged into the Income Tax system

  • New Income Tax rates for these groups can be introduced to ensure they do not lose out. Any subsequent alignment should only happen by reducing the higher rates, rather than increasing the lower rates

  • A first stage of a merger should operationally align the charges, publish employers’ National Insurance on wage slips and rename National Insurance to something which more honestly and accurately describes its function

  • A second stage should simultaneously abolish National Insurance completely, mandate a reassessment of earnings to incorporate employers’ National Insurance contributions and adjust Income Tax rates to collect the same revenues from the same individuals as before abolition


You can read the full report here


Click here for the complete press release





Matthew Sinclair, Director of the TaxPayers’ Alliance, said:


“George Osborne needs to take action to boost economic growth and abolishing National Insurance could be a key part of that.  Having to administer three taxes on the same income wastes time and money businesses should be using to grow the economy and then take on new staff.  It also wastes taxpayers’ money enforcing the different sets of rules.  Abolishing National Insurance will make the tax system simpler but also more transparent.  People should be able to see exactly what they are paying, instead of being misled because employers’ national insurance depresses their earnings but doesn’t appear on a payslip.  Now isn’t the time for timid tinkering with the tax system, we need serious reforms to make it simpler and more honest.”




You can read the full report here


Click here for the complete press release


The TaxPayers’ Alliance (TPA) has called for National Insurance (NI) to be scrapped to make the tax system simpler and more transparent. The need for tax reform has never been more pressing, particularly in light of this week's revelations about HMRC errors.


The campaign group says National Insurance serves no purpose and has set out a package of measures to merge both employers’ and employees’ contributions with Income Tax. The call comes as part of the Treasury's call for feedback as part of its consideration of the integration of the operation of the income tax and National Insurance contributions system.


The TPA is urging George Osborne to announce the move in his Autumn Statement as a key measure to kick-start economic growth.  It would also fit with the transparency agenda that has seen, for example, councils urged to publish all spending above £500 and the Government publish details of all contracts with suppliers. Details of how the reforms could be executed have been laid out in a report that breaks new ground since this issue was last considered by government, when Nigel Lawson was Chancellor of the Exchequer in the 1980s.


The move could significantly reduce the burden on businesses of complying with these taxes, as well as making it easier for people to see exactly how much tax they are paying on their earnings.


You can read the full report here


Click here for the complete press release


The key findings of this paper are:




  • The Government should abolish National Insurance – both for employers and employees. It makes the tax system opaque, complicated and costly yet serves no purpose that could not be fulfilled by the Income Tax system. Abolition would make it simpler, cheaper and more transparent

  • Pensioners, the self-employed and others who pay reduced rates of National Insurance should not pay more tax when it is merged into the Income Tax system

  • New Income Tax rates for these groups can be introduced to ensure they do not lose out. Any subsequent alignment should only happen by reducing the higher rates, rather than increasing the lower rates

  • A first stage of a merger should operationally align the charges, publish employers’ National Insurance on wage slips and rename National Insurance to something which more honestly and accurately describes its function

  • A second stage should simultaneously abolish National Insurance completely, mandate a reassessment of earnings to incorporate employers’ National Insurance contributions and adjust Income Tax rates to collect the same revenues from the same individuals as before abolition


You can read the full report here


Click here for the complete press release





Matthew Sinclair, Director of the TaxPayers’ Alliance, said:


“George Osborne needs to take action to boost economic growth and abolishing National Insurance could be a key part of that.  Having to administer three taxes on the same income wastes time and money businesses should be using to grow the economy and then take on new staff.  It also wastes taxpayers’ money enforcing the different sets of rules.  Abolishing National Insurance will make the tax system simpler but also more transparent.  People should be able to see exactly what they are paying, instead of being misled because employers’ national insurance depresses their earnings but doesn’t appear on a payslip.  Now isn’t the time for timid tinkering with the tax system, we need serious reforms to make it simpler and more honest.”



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