There are pressing reasons for understanding a bit about how our tax system works and very specifically what National Insurance is. NI is used as successive governments’ tax increase of choice because of a widespread and mistaken belief that it is a direct payment to the NHS. The Liberal Democrats had it in their 2017 manifesto, Gordon Brown put 1p on NI to ‘pay for’ the NHS, Frank Field (Labour) gave evidence on NI to the Lords Committee on the long-term sustainability of the NHS and his website says he is working on this issue with Oliver Letwin(Conservative) and he wants to restore a ‘something […]
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Tag Archives: National Insurance Contributions
How should we pay for the NHS? Last month, a cross-party coalition floated the idea of a hypothecated tax, a tax devoted to a specific purpose, as a way of funding the NHS. People like the NHS and would be willing to pay more tax if the tax was devoted to that purpose, so the argument goes. This proposal does the rounds from time to time. Often this special “NHS tax” is linked to National Insurance (NI), which after all already meets a proportion of health costs, and appears to be a tax that is already hypothecated towards benefits and […]
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We started off paying for the National Health Service via National Insurance Contributions in 1912. Lloyd George’s slogan – 9d for 4d – was only the first of many attempts to pass off National Insurance as a pain free alternative to taxation. The impression was created that by paying contributions people were building up a fund which would entitle them to future benefits. It was very successful, and many people still believe it, but in reality it was, and is, a giant Ponzi scheme. Today’s contributions pay for the benefits paid out now. “.. all the benefits in some sense […]
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