Social care 'has been used as political football' says Keegan

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Government ministers are reportedly accelerating plans to increase NICs by one percent for both employers and employees to fund the social care reforms as Boris Johnson looks to finally fulfil a pledge he made shortly after becoming Prime Minister in July 2019. But there are growing fears the move being considered by Downing Street and The Treasury could hit the pockets of Britons by an eye-watering £10billion, which critics have claimed would be a grossly unfair tax on younger people. Mr Johnson is also facing a huge Cabinet revolt over his plan as it would be a breach of the Conservative Party manifesto from the 2019 general election.

Chancellor Rishi Sunak also fears working families could be hurt further if taxes are hiked during the ongoing coronavirus pandemic.

A number of ministers have warned the increase is fraught with risk as it could be regarded by many as a tax on jobs, and would hit younger taxpayers priced out of the competitive housing market.

The TaxPayers’ Alliance is furious with plans to hike NICs to pay for social care reforms, with chief executive John O’Connell raging “simply whacking up taxes on working people and businesses” is not a “sustainable solution”.

He warned those on the lowest incomes – who are already feeling the pinch from strict tax measures – will be hit hard at a time when the economy is only beginning to bounce back after the Covid pandemic.

Mr O’Connell has urged the Government to “look for a long-term funding model coupled with eradicating wasteful spending in the public sector”.

The TaxPayers’ Alliance boss told Express.co.uk: “Funding social care requires a more sustainable solution than simply whacking up taxes on working people and businesses.

“Those on the lowest incomes are already paying a disproportionate amount in tax, a hike in NI is the last thing they need.

“What’s more, when politicians earmark tax proceeds for specific items of spending, it is usually smoke and mirrors.”

He added: “National insurance itself is little more than just another income tax, with receipts used for day-to-day spending and quite often wasted.

“The Government should rethink this assault on taxpayers’ pockets and look for a long-term funding model coupled with eradicating wasteful spending in the public sector.”

Professor Len Shackleton, Editorial and Research Fellow, Institute of Economic Affairs (IEA) think tank, warned raising NICs could prove dangerous with the jobs market and economy already under pressure as the country exits the pandemic.

He warned it would be “wrong to place the burden of this tax solely on the shoulders of younger workers, without extending NI to post-state pension age taxpayers to help pay”.

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The expert told Express.co.uk: “Raising National Insurance contributions would be a burden on working-age people at a time when jobs are insecure, inflation is rising and wages are squeezed.

“The Government knows many of the public believe that National Insurance pays for the NHS, and social care would just be a natural addition.

“But NI is not ringfenced to the NHS or anything else, and is simply an income tax by another name – albeit with different exemptions, starting points and arbitrary changes in rates which don’t coincide with tax bands.

“It would be wrong to place the burden of this tax solely on the shoulders of younger workers, without extending NI to post-state pension age taxpayers to help pay.

“Any rise in Employer, as well as Employee Contributions, may give the illusion that businesses will help pay, but economists agree that workers ultimately pay for ‘employer’ NI through lower pay down the line.

“Employers can only pay workers what their work contributes to the business; if the state takes a larger chunk there is less available for wages. Merging all NI into income tax would make this explicit.”

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