Time to Bin the NI Tax?

Huw Davies

National Insurance, the tax created by Lloyd George in 1911 which helped develop the welfare state we know today. It was a revolutionary and controversial idea for its time, a key plank of the Liberal’s social reforms of the early 20th century.

Yet, in its 109th anniversary year, I feel the tax has lost all its meaning, what it was actually intended for. When it was initially created, it was to ensure all British citizens could access health provisions when they fall ill, benefits during tough times of unemployment or disabilities, and a pension in their old age. Today, however, it is simply another form of income tax, who’s funds go into the same pot and are divvied out to every governmental department.

I believe it is time to restore the tax to its true purpose. This can be done by totally reforming how the tax is paid entirely. Instead of the complex and bureaucratic banding system, along with differing rates forthe self employed and those who aren’t, we need to radically simplify the tax.

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In an ideal world, I would scrap the entire current system and create a simple 10% rate paid for by all on whatever income. This would, I believe, dramatically increase revenue for the Exchequer. Along with this, I would explicitly say that the revenue raised from National insurance would go to what it was intentionally created for. That is for the NHS, pensions, and welfare support benefits.

Now, as a Conservative, what I am proposing may seem like I’ve converted to the works of Marx. But, it is natural for a Conservative to want a simpler taxation system, as well as a strong but fair safety net to support those in most need. In many senses, what I am proposing is a flat tax, whereby everyone contributes, with no exceptions to allow tax evasion of any sort. It is also important to ensure the general public feel that even though some may in the end pay a little bit more in tax, they will get the support they need in the longer run. As costs rise for the NHS and social security it is important we find radical, but fair solutions in order to pay for them.

There are also increasing demands upon the health service for areas such as social care, which is going to need cash. Let’s take the opportunity now to change National Insurance to suit the 21st century. Restoring its purpose, yet ensuring the public feel that a ring fenced tax is going towards the NHS exclusively. This may mean people on certain incomes will pay more in tax. But,in this era of COVID I am sure, as long as the public know where it is going, they will be understanding that overall it will benefit them and Britain as a whole.

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