If National Insurance is scrapped, who wins and who loses?
Mar 7, 2024
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Debates on scrapping national insurance, the economic implications, and challenges of simplifying the tax system are discussed. Political editor shares insights on the idea's reception. Different perspectives on the potential abolition and its impact on work taxes, public services, and the economy are explored.
Abolishing national insurance may simplify the tax system but could pose financial challenges for the government.
Simplifying taxes by cutting national insurance could boost workforce participation but might negatively impact pensioners.
Deep dives
Debate on National Insurance Simplification
The podcast delves into the debate surrounding the simplification of the tax system, particularly focusing on the implications of abolishing national insurance. Various experts discuss the fairness and efficiency of the current tax structure, highlighting the complexities and historical discussions on integrating national insurance and income tax.
Impact of Tax System Simplification on Workforce and Pensioners
The discussion extends to the potential impact of simplifying the tax system on the workforce and pensioners. Experts emphasize that simplifying taxes, particularly by cutting national insurance, could incentivize workforce participation and stimulate economic growth. However, concerns are raised about potential tax increases for pensioners if national insurance is abolished.
Political Implications and Future Election Considerations
The podcast explores the political dimensions of simplifying the tax system, linking it to potential election strategies. It highlights the Chancellor's efforts to shift the public discourse towards national insurance from income tax, aiming to portray the budget as pro-worker. Additionally, considerations regarding election timings and the political maneuvering surrounding tax policies are discussed, emphasizing the dynamics between tax cuts, public services, and electoral strategies.
After cutting national insurance for the second time in yesterday's Budget, the prime minister has said it's his "long-term ambition" to eventually scrap the tax.
As only those in work pay it, it's seen by many – including the Chancellor - as an unfair double tax on those in the workforce. But, completely abolishing it would cost the government £46bn.
Labour have criticised the plans, saying the move would cost more than the cuts unveiled in Liz Truss' chaotic mini-budget and the director of the Institute of Fiscal Studies called it unrealistic.
On this edition of the Sky News Daily, Niall Paterson is joined by Greg Thwaites from the Resolution Foundation and Linda Yueh, broadcaster and economist, to explore how realistic scrapping NI would be and why it's so tricky to simplify the tax system.
And, political editor Beth Rigby pops in to discuss how this idea is playing out politically.
Producer: Sydney Pead Assistant producer: Iona Brunker Interviews producer: Melissa Tutesigensi-Charles Promotion Producer: David Chipakupaku Editor: Wendy Parker
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