Government “should think again” on NI proposal, says IEA expert

Responding to reports that Boris Johnson will increase National Insurance to fund social care reform, Professor Len Shackleton, Editorial and Research Fellow at the Institute of Economic Affairs, said:

“Many younger workers have been knocked sideways by the pandemic. Now government is proposing a hike in national insurance contributions that will hit this group hardest. 

“It is absurd that those over state pension age with substantial incomes and assets should not pay part of this burden because they are not currently liable for NICs. As for Employer NI, this is a crude payroll tax which discourages employment at the margin, and over time is passed onto workers in the form of lower pay. 

“Government should think again, and steer away from taking on some open-ended commitment by the taxpayer. Families with a lot of capital at risk from prolonged need for social care should have the responsibility to insure rather than look to – often much poorer – workers to support them.”