In response this week’s Budget, I’ve made the case for integrating employers’ national insurance, income tax and employees’ NI.
“Complexity has long been a feature of taxation in Britain, and nowhere is this more manifest than in the National Insurance regime. Constant tinkering over the last 70 years has left it unrecognisable and has reduced the likelihood of the electorate appreciating (i) what their total tax burden is; and (ii) the size of any increase.
“But what makes the NICs regime especially opaque is the employers’ part of national insurance, not least because the incidence falls squarely on employees.”
This is not to say employers are unburdened – studies have shown that administration alone imposes a significant cost on businesses and disproportionately affects smaller companies:
“SMEs are vital to the UK economy. Cutting costs creates an incentive for them to use their resources more efficiently and to transfer them into more production or more hiring. Further tweaking is not enough.”
Read my Huffington Post column in full here.