I see with fury that the Resolution Foundation, a Think Tank extremely closely linked to the current government, has suggested that tax rises are inevitable and that Rachel Reeves should increase Income Tax rates with a partial offset by cutting National Insurance.
That would mean that as NI isn’t payable on pensions, pensioners will suffer a higher than necessary Income Tax hike in order to fund a cut in NI for those in work.
What is the logic of that?
If she wants to tax income that isn’t taxed as heavily as that from employment that she perceives “the idle rich” benefit from disproportionately (rents, interest, dividends from investments, capital gains etc), then she should tax them directly.
If she is thinks the Triple Lock is excessively generous, then she should have the balls to scrap it.
Otherwise, this is a cowardly and underhand attempt to benefit workers (who can after all increase their income by working more hours or getting a better job etc) at the expense of those whose income is fixed and who by enlarge won’t understand what a fraudulent sleight of hand has been inflicted on them.
Bearing in mind the State Pension now takes up almost all of the Income Tax zero rate band, which hasn’t been increased to cover inflation for years, and won’t be increased for years to come, this would mean pretty much anyone who has a private pension will suffer. Most of those are not remotely “super rich” by any stretch of the imagination.
This of course is all necessary primarily to cover the failure of this government to push through the cuts in welfare spending which it itself deemed necessary and fair, in the face of opposition by its own far-left MPs.
Not only would pensioners therefore be subsidising those in work, they’s also be subsidising the growing numbers who could work but won’t.
This is perhaps what she means by “protecting the NHS” because NI was introduced originally precisely to fund the NHS, state pensions and sickness and unemployment benefits. It’s obviously true that older people use the NHS more than other groups but surely the whole point was that it was “free at the point of use”. The corollary of that is that it’s paid for evenly over over life. Why then should the current cohort of pensioners suddenly be required to make up a shortfall in funding?
It’s certainly true that it’s working age individuals who are making excessive use of sickness and unemployment benefits and indeed ineffective counselling schemes vainly aimed at getting them to work.
Finally, it must be seen as absolute cant to say on the one hand that protecting the NHS is your priority and then cut National Insurance which traditionally is seen as being ring-fenced to pay for it.