NATIONAL INSURANCE HIKES WOULD BURDEN THE POOREST – CHURCH ACTION FOR TAX JUSTICE
Church Action for Tax Justice (CATJ) is calling for a rethink over the proposed plans to increase National Insurance Contributions (NICs) to help plug the shortfall in funding for social care services.
CATJ believes that the move, to increase NICs by 1.25% (or 2.5% if you include employer’s contributions), would be deeply unfair, creating needless poverty and financial instability in countless households across the nation – and that there are far better ways of dealing with the funding gap.
Former Archbishop of Canterbury, Dr Rowan Williams commented,
“This is the worst possible time to increase the tax burden on the less secure and prosperous in our society. The new proposals are the opposite of “levelling-up”. We need a coherent re-think of the chaotic and overloaded systems of social provision we currently have, so as to guarantee the security of all; and this, sadly, is not it.”
Cat Jenkins, CATJ Programme Manager, said:
“NICs are already one of the most regressive taxes in a confusing and complicated landscape. This increase would fall squarely, and unfairly, on the shoulders of those least able to bear it. If increased taxes need to be used to fund social care – and it’s not certain that they do – then it makes much more sense to look at increasing the contributions made by the wealthy. CATJ is calling on Christians to pray for wisdom for decision makers and for all those affected by these plans, so that inequality can be addressed and the needy protected.
These planned increases will hurt people most if they are low paid and work for someone else[i]. Those fortunate enough to have unearned income, such as through dividends on a company or rent from property will escape relatively unscathed.
Worryingly, many of the same people who will be hit by this proposal are also about to receive another financial blow: the imminent £20 per week cut to Universal Credit. And many of them are also the ones who have kept the country functioning through the pandemic. Care workers, bin men, supermarket shelf stackers, transport drivers, and those vaccinating, feeding and nursing us and our loved ones – often on low wages, with minimal job security, and sometimes even with inadequate PPE.
CATJ is calling for these plans to be halted, and instead for alternatives to be considered, such as the introduction of wealth taxes and fairer, more transparent taxing of multinational companies.
For more information and to arrange an interview with CATJ please contact: Cat Jenkins, Programme Manager, Church Action for Tax Justice
Church Action for Tax Justice (www.catj.org.uk) is a programme of the Ecumenical Council for Corporate Responsibility, a Christian charity working for a world in which money is used to shape a fairer, greener future. www.eccr.org.uk
[i] NICs disproportionately burden the less well-off in a number of ways:
- They start to be levied at a lower earned income level than income tax, being suffered even by the low-waged;
- They tail off on earnings over £50,268 – so high earners are actually charged at a significantly lower rate, overall, than the low paid;
- They are levied only on earned income. For those fortunate enough to have an unearned income (for example, from dividends, interest or rent), that income is free of NICs;
- Nor are they levied on capital gains, meaning that these are also taxed benignly compared to income from work;
- NI is not charged on those past retirement age. This means that it is levied disproportionately on younger workers, who are less likely to have accumulated the ‘safety net’ of savings or assets which many older people have;
- For those self-employed people who are able to invoice for their work through a dedicated company, there is also the potential to avoid a significant portion of NI on those earnings.