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Boris Johnson’s announcement today that health and social care reform will be funded through a 1.25 percentage point increase in national insurance has been branded a ‘tax on jobs’ by employer groups.
The government’s much-anticipated “health and social care levy” will see a 1.25 percentage point rise in both employers and employees' national insurance contributions (NICs) from April 2022, with the same increase in share dividends tax.
The prime minister said this increase would raise almost £36bn over the next three years, with money going directly to health and social care across the UK. “This won’t be pay awards for middle management, it will go straight to the front line at a time when we need to get more out of our health and social care system than ever before,” he said.
Laying out the plan, the prime minister explained why government is not increasing income tax or capital gains tax instead. “Income tax isn’t paid by businesses, so the whole burden would fall on individuals, roughly doubling the amount that the basic rate taxpayer could expect to pay, and the total revenue from capital gains tax amounts to less than £9 billion this year.
“Instead our new levy will share the cost between individuals and businesses, and everyone will contribute according to their means, including those above state pension age, so those who earn more will pay more.”
He said that the highest earning 14% will pay around half the revenues, those earning less than £9,568 will not pay, and the majority of small businesses will be protected with 40% of all businesses “paying nothing at all”.
Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said it was yet more tax on business, particularly on some of the most struggling sectors.
“It’s vital that the social care sys