apparently we're all in this together

National Insurance Contributions are a funny old tax. Originally levied in order to pay for pension entitlements and welfare payments- the money now seems to slosh around in the government money pit along with all the other taxes, such as VAT and income tax.


At first glance it seems odd that National Insurance was the tax Labour chose to increase- by 1% in 2011. As National Insurance is paid by employers and their employees the cost burden is somewhat spread. It appears that the other viable option, VAT, was discounted because it is regressive (i.e. everyone pays the same amount, regardless of earnings) Of course another option is to increase the scope of VAT rat than the amount- but the items that are currently VAT free such as food and kid’s clothing are essentials – and increasing the price of food during a recession is hardly a vote winner.

It all kicked off when the Tories said they would reverse half this tax rise by making ‘efficiency savings’- which in my opinion is a bit like me saying, I’m not to borrow on my credit card anymore, instead I will stop going to Starbucks in the mornings and put the £2.70 towards the credit payments. What I mean by that is- nice idea, difficult in practise- a girl’s gotta drink.

Even with these proposed efficiency savings, the Tories still need to find £6bn more to fill the hole. Yet business is supporting their plans. Why? Because they saw a National Insurance Rise is a tax on jobs and will harm economic recovery.

And what do the Lib Dems think? They agree with Labour- a National Insurance rise is the least worst option.

So how does this affect your vote? I guess the other consideration is whether the Conservatives will have to increase another tax to pay for this National Insurance cut. They say what comes up must come down... but in our case... perhaps what goes down must come up?



Poli-Chick

xxx