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Should the National Insurance rise be scrapped?

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Written by: Emma Lunn
24/01/2022
Former Brexit secretary and ex-minister David Davis has called for the planned National Insurance rise to be scrapped as the cost of living crisis takes hold.

Prime minister Boris Johnson announced in September that National insurance contributions, which are paid by employers and workers, will rise by 1.25 percentage points at the start of the new tax year in April.

He said the new levy would raise almost £36bn over the next three years, with money “going directly to health and social care” across the whole UK.

Davis, who last week called for Johnson to resign over the Downing Street parties scandal, is one of a number of pundits who says the tax rise shouldn’t go ahead.

Speaking on BBC Radio 4’s Today programme, he said: “It was a judgment made on, frankly, quite a lot of wrong data. They didn’t know at the time that by April we would have the highest inflation rate in 30 years, they didn’t know that interest rates would be going up, council tax would be going up, the fuel price is about to jump by £700 a year for the average family. Therefore they didn’t know quite what pressure there would be on ordinary people.”

Davis’ stance on National Insurance is echoed by a number of small business owners around the UK.

Lewis Shaw, founder of Shaw Financial Services, said: “The government shouldn’t push the NI rise back; they should scrap it altogether. We are suffering one of the worst squeezes in living standards in the past 40 years, which will add jet fuel to the fire.

“The wealth of the UK’s billionaires has soared by more than a fifth, yet we’re asking to make the ordinary worker poorer? Not to mention the amount of tax lost in Britain through non-payment, avoidance and fraud, which has increased to £35bn, according to official figures from HMRC. How about tackling wealth inequality and closing tax loopholes before we start shafting the people who create the wealth that is then siphoned out of the country. Workers of the world, unite.”

Debbie Porter, managing director at Destination Digital Marketing, said: “With all costs rising across the board, the government needs to give the population a financial break. What looks great for raising cash in a spreadsheet at Whitehall is divorced from the reality of the impact this is having on each individual’s finances. This lack of understanding of the common man is compounded by the fact that no-one in government will find any of these increases in costs of living a burden on their own bank accounts.”

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