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News & views

Tax name confusion

[25 Feb 2014] The MP for Ipswich, Ben Gummer, introduces a 10-minute rule Bill in the Commons today, designed to rename National Insurance the 'earnings tax'. 

How barmy is this? We already have 'income tax', so what would be the difference in meaning between 'earnings tax' and 'income tax'? It would cause even more confusion. You could more sensibly call it an 'employment tax' or 'job tax', because that's what it is. But wouldn't it be better to scrap National Insurance, since it has so little relationship with the State pensions or healthcare many people think it provides? The whole tax would then be loaded on to people's earnings, enabling them to see just how big a slice the Chancellor takes.

And the big disadvantage? Currently, only income tax, not National Insurance, is levied on pensions. So pensioners' income would increasingly be squeezed if the two taxes were unified.

Pensioners tend to vote, and they wouldn't like it at all.

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