Downing Street is actively considering the merger of income tax and NI in the next parliament. Sources said the Chancellor has long considered NI a stealth tax and came close to implementing the plan in the last budget. Serious concerns were raised, however, over whether the two computer systems involved could be successfully integrated. Under a merger, the total amount paid by workers on the basic rate of income tax would rise from 20% to 32%. The amount paid by those in the higher bracket would rise from 40% to about 52%, with 2% added to earnings above £42,000. A Conservative source stressed that fears among pensioners that the move is designed to make them pay NI as well as income tax, were unfounded. The plans would also make it clearer to taxpayers how much of their earnings they are handing over to the state. However, a Labour member of the Commons Treasury Select Committee, John Mann, was fiercely critical of the proposal. “It would be disastrous. People understand national insurance is covering social welfare, not least the NHS,” he said. “Merging it with tax would be a long-term way of undermining the NHS.”
Source: The Times (30/06/2014)
