National insurance rise plan will leave NHS with tax bill of £450m, claim Tories

The NHS will be faced with a tax bill of nearly £450m because of the government’s plan to raise national insurance (NI) by 0.5%, the Conservatives have claimed.

In his Pre-Budget Report on Wednesday, chancellor Alistair Darling announced a 0.5% rise in NI and a 1% cap on public pay settlements from 2011. But he said spending on “front-line services”, including health, would be protected

However, shadow chancellor George Osborne insisted that public services – and the NHS in particular – would suffer due to the NI rise because the government was the country’s biggest employer, reports the BBC.

“When they say they are protecting NHS spending, what they don’t tell you is that the NHS is probably going to have the largest national insurance bill as a result of this tax change – a £446m bill,” he said.

“So the idea that Labour was presenting yesterday that they can protect the health budget and increase national insurance is a nonsense; it will lead to a real cut in health spending.”

Michael Carter, a partner at law firm Addleshaw Goddard, said NI is again being used as an “easy means” of raising tax income from employers and employees.

“I would suggest that everybody, save for perhaps politicians, would benefit from the amalgamation of NI and income tax so we have real clarity and everybody can clearly see tax changes,” he said. “In everything but name this is a 1% increase in income tax.”

Employers group have described the decision to raise NI as “madness” and a “tax on jobs”.

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