“The influential Free Enterprise Group made up of 39 Conservative MPs has in a paper entitled “Seven shots in the arm of Britain” called for those over the State Pension Age (currently 65) who continue working to be made to pay National Insurance. Surprisingly none of their seven shots calls for the top 10% of earners to pay a penny more towards the deficit!
“National Insurance in the UK is a tax paid by employers and workers (who are under 65) to fund certain state benefits including the state retirement pension and as a contributory system of insurance against illness and unemployment. This tax provided the Government with £96.5billion pounds in 2010-11 making 21.5% of the revenue collected by HMRC according to Government statistics. National Insurance has always ceased to be paid at the age you can draw your state benefits as it has always been felt you have paid for your benefits by then.
“Anyone over age 65 who has an income still of course pays income tax in the normal way.
“With the raising of the State Pension Age and annuity rates at an all-time low, the removal of the default retirement age will mean more and more people work past 65. Some of those who continue to work will do so because they want to, many will simply have no choice as they cannot afford to retire.
“The Free Enterprise Group have worked out making the over 65s pay National Insurance will raise £2billion more for the Government.
“The elderly continue to be seen as a soft target for extra revenue. They have already seen the “Granny Tax” reducing their allowances, and further increases in the age before which they are paid their state pension (and can stop paying National Insurance). Now the Free Enterprise Group would like to see those who cannot afford to retire at 65 hit with a further substantial tax bill.
“The Free Enterprise Group ‘s report says just because someone turns 65, “but chooses to continue working”, why should they get a significant increase in take-home pay? This misses the point that many will not “choose” to work on past 65 but will be “forced” to. It also begs the question, why the Group think it is not morally right for those who have worked and contributed all their life, (and who are continuing to work and pay income tax), to pay slightly less in old age, while they think it is morally right for the Government to now mug them for even more tax to pay for a recession the elderly did not cause.
“A second of the seven shots in the arm calls for ‘care ISAs’ to be set up to allow people to save for their old age care costs, tax-free (and not be a burden on the state). So all those who are going to pay the extra tax in the form of National Insurance well past 65 (to pay for state care) are also now encouraged to put further money away so they don’t use it!
“Nick Boles MP is expected to say in a speech to the Resolution Foundation today that means-testing of pensioners should be brought in for benefits such as free TV licences, bus passes and winter fuel allowance if the Conservatives are re-elected in 2015. Yet another shot for pensioners in their something beginning with ‘A’.”
This blog, and others, can be seen on http://blog.buckconsultants.com/guess-whos-making-another-contribution-to-cutting-the-deficit/
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