March 8 2014 Latest news:
Tuesday, February 25, 2014
Ipswich MP Ben Gummer is today proposing a radical change in the way tax is charged – and looks certain to get Treasury backing.
He has already persuaded the government to send income taxpayers a breakdown of where their taxes are spent – the first forms should be out at the end of this year.
Now he is seeking to change the name of National Insurance to Earnings Tax, which he says will more accurately represent its role in the country.
It is a move that is believed to have the support of the Chancellor of the Exchequer.
National Insurance was first introduced by David Lloyd George when he was Chancellor in 1911 as a way of paying a basic state pension for the first time.
It was designed as a contributory benefits scheme, but Mr Gummer said the contributory element had been eroded over the years.
“Now with the introduction of universal benefits and the basic pension, the contributory link will be lost completely – the benefits will be paid directly by today’s taxpayers so the name change would reflect that completely.”
Mr Gummer said in a perfect world he would like to see National Insurance absorbed into income tax, but the technical obstacles to that were huge and that could not happen for many years, if ever.
However his Labour opponent at the next general election, David Ellesmere, did not support the change – believing it was a way of undermining support for what is a vital area of government finance.
He said: “I don’t think what National Insurance is called is a major issue for the people of Ipswich who are still struggling with the rise in the cost of living and low wages four years after this government came to power.”