The Treasury is to announce plans to bring together income tax and national insurance payments in one single \”tax take\” figure, to make it easier for businesses to administer tax and individuals to see how much they are paying.
Yes, this is a good idea. Simplification is anyway and now that we\’re moving to non-contributory state pensions there\’s no real reason to maintain the fiction of a national insurance fund any more.
However, only two cheers because they will almost certainly choke and not do it properly.
They\’ll not, I warrant, roll employers\’ national insurance into this one single charge. Which they ought to for economic reasons (look, even R. Murphy agrees that from the bulk to all of employers\’ NI is actually paid by the worker in the form of lower wages) but won\’t for political reasons.
Making base rate income tax 44% or so just isn\’t going to go down well: even though it\’s the exact equivalent* of 20% income tax,11 % employees\’ NI and 13% employers\’ NI.
I just cannot see anyone having the balls to do that politically. In the short term there would be hay to make for lefties. In the long term it would of course be joyous for low tax people: for finally people would really be able to see how much they\’re paying.
But politics is a short term game, isn\’t it?
*Well, no it isn\’t because I\’ve not bothered adjusting for the way that NI is on gross wages etc but this is close enough