Time for honesty in our tax system

October 27, 2014 5:06 PM

The Times’ Philip Webster’s “Red Box” email briefing this morning carried some interesting polling in light of calls for more funding of the NHS (which I discussed on this site last week).

To pinch liberally from the briefing, the question asked was “If spending more money on the NHS was the only way to keep the current standard of services, would you be willing to see the basic rate of income tax rise from 20 per cent to 21 per cent to fund the NHS?”

Some 67 per cent of respondents said yes – when the question was changed to a 22 per cent rate, that dropped to 51 per cent. When asked about a 25 per cent level of basic income tax, however, support dropped to just 26 per cent with a full fifty per cent of people against the idea. Only 15 per cent liked the idea of a 30 per cent tax rate.

But here’s the rub. Because of National Insurance, with the employee’s rate at 12 per cent and the employer’s rate at 13.8 per cent, the real basic rate of tax isn’t 20, 25 or 30 per cent. It’s 40 per cent!

That’s why we’ve been calling for years for Income Tax and National Insurance to be merged. The latter long ago ceased to be different from the former in any meaningful way, and ends up in the same pot once they both get to the Treasury.

Our campaign video below makes the case for more honesty and transparency in the tax code, so that people know exactly what they’re handing over to the taxman. It’s time to abolish National Insurance.

NB: The “Red Box” email is well worth subscribing to, as is The Telegraph’s excellent Morning Briefing, compiled by Stephen Bush.

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