Shadow Chancellor has urged the Chancellor
to come clean on his plan to
“pick pensioners' pockets to fund the abolition of National
Insurance.”
The call comes as new analysis from the House of Commons Library
commissioned by the Labour Party reveals that replacing the lost
NICs revenue with an increase in the basic and higher rate of
income tax would mean income tax rates going up by 8p in the
pound.
For a retired pensioner with an average income of £21,800 from
their occupational and state pensions, that would mean paying an
extra £738 per year on their income above the current £12,570
personal allowance.
The Chancellor has previously said that he
would “merge income tax and national insurance” as part of his
£46 billion unfunded plan to abolish national insurance
contributions.
The former Chancellor Nigel Lawson rejected plans to abolish
national insurance forty years ago because “it would destroy the
contributory principle and create many losers, especially among
the elderly.”
Earlier today, Reeves said the Tories' £46 billion unfunded tax
plan was “a tax bombshell aimed squarely at Britain's
pensioners.”
Speaking in the House of Commons, , Labour's Shadow Chancellor,
said:
“The late Chancellor Nigel Lawson, the Prime Minister's idol,
warned merging National Insurance and income tax “would destroy
the contributory principle and create many losers, especially
among the elderly.
“In fact, a retired pensioner with an average occupational
pension income of £198 per week, would pay an additional £738 per
year in tax.
“Isn't this why the Conservatives won't come clean - because they
are planning to pick pensioners' pockets to fund the abolition of
National Insurance?”
Ends
Notes to editors:
Nigel Lawson rejected the idea of abolishing national insurance
contributions forty years ago:https://www.theguardian.com/money/2024/apr/30/secret-thatcher-era-memo-undermines-sunaks-plan-to-scrap-national-insurance
House of Commons Library analysis commissioned by the Labour
Party shows that replacing NICs revenue with a higher basic and
higher rate of income tax would mean rates of income tax going up
by 8%, based on HMRC figures.
The State pension is £221.20, or £11,502.40 a year. https://www.gov.uk/new-state-pension/what-youll-get
The Median occupational pension income is £198 per week, or
£10,296 per year.https://www.gov.uk/government/statistics/pensioners-incomes-series-financial-year-2021-to-2022/pensioners-incomes-series-financial-year-2021-to-2022
The tax-free personal allowance is £12,570, leaving taxable
income of £9,228.40. 8% of £9,228.40 is £738.27.
This would be another £740 on top of the almost £1,000 that
Conservative tax plans are set to hit them by, according to the
Resolution Foundation:https://www.resolutionfoundation.org/press-releases/sweet-and-sour-budget-combines-8-billion-election-year-personal-tax-cuts-with-post-election-plans-for-38-billion-of-tax-rises-and-spending-cuts/
