"Rachel Reeves is under pressure to overhaul the UK's tax system after the Resolution Foundation urged her to cut employee national insurance contributions by 2p and offset it with an equivalent rise in income tax. The thinktank, which has close ties to senior Labour ministers, said the measure could raise an additional £6bn a year by spreading the tax burden across a wider pool of taxpayers, including pensioners, landlords and the self-employed."
"Publishing proposals for up to £30bn in extra revenue, the foundation argued that the "2p switch" would help "level the playing field" while keeping working-age employees' take-home pay unchanged. The plan mirrors the argument made by former Conservative chancellor Jeremy Hunt, who described national insurance as an "unfair double tax on work" when he cut contributions by 4p last year."
The Resolution Foundation proposed cutting employee national insurance contributions by 2p and offsetting the cut with an equivalent rise in income tax, estimating an additional £6bn a year by broadening the tax base to include pensioners, landlords and the self-employed who do not pay employee NI. The package of proposals suggested up to £30bn in extra revenue and argued the "2p switch" would level the playing field while preserving working-age take-home pay. The recommendation echoes claims that national insurance acts as a double tax on work and clashes with Labour's pledge not to raise income tax, complicating the chancellor's November budget amid weak growth, higher borrowing costs and a sizeable fiscal gap.
Read at Business Matters
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