Hunt says income tax could rise if National Insurance is scrapped

Jeremy Hunt said a day after the government delivered its spring budget that income tax might eventually have to be increased to pay for the scrapping of National Insurance.

The chancellor has spent around £10bn cutting NI by 2p in the budget and has said the government’s ultimate aim is to scrap the tax entirely.

Asked how he would pay for it, Hunt told Sky News: “We’re not saying this is going to happen anytime soon and in fact it’s not the only way to end the unfairness of the levy: you Income tax and national insurance could be combined.”

It suggests the government is considering raising income tax as a way of paying for the scrapping of National NI, with Mr Hunt saying the existence of National NI was “unfair” as it amounted to a “double tax on jobs”.

Some Conservative MPs now believe the Conservatives are planning to make scrapping NI an election manifesto promise. Labor said the move would cost £46bn a year, equivalent to £230bn over the five years of parliament, and questioned how the Conservatives would pay for it.

Shadow chancellor Rachel Reeves told ITV’s Good Morning Britain: “An hour and ten minutes after the budget statement, the chancellor started to propose scrapping national insurance altogether. idea.”

“I think it’s really irresponsible to start making promises without really knowing where the money is going to come from,” Reeves said. “The last time ministers tried to do this was Liz Truss and Kwasi Kwarteng. They’ve got £45 billion of unfunded tax cuts. The Chancellor yesterday proposed £46 billion of unfunded tax cuts.”

In radio interviews on Wednesday and Thursday, the chancellor stressed that he wanted to “end the unfairness of the system” but that eliminating NI contributions entirely would be “a big deal”. He admitted the tax would not be eliminated “any time soon.”

Any increase in income tax will affect pensioners who do not pay national insurance. As a result, some Conservatives criticized the decision in Wednesday’s budget to cut national income rather than income tax.

Mr Hunt insisted to Sky that the government had “done huge amounts of money for pensioners” and that eventually economic growth would help increase the state pension. “This government introduced the triple lockdown… and we really prioritized pensioners,” he said.

Experts at the Institute for Fiscal Studies and the Resolution Foundation, two influential economic think tanks, said the “big picture” of the budget was largely unchanged as overall tax collections were still rising due to fiscal drag.

In analysis released overnight, the Resolution Foundation said the budget showed real household disposable income would fall by 0.9%, making this parliament the first in modern history to see living standards fall between 2019 and 2025.

IFS director Paul Johnson said the chancellor had used “smoke and mirrors”, while Torsten Bell of the Resolution Foundation said Wednesday’s tax cuts relied on The prospect of a £19bn post-election tax rise and “another fiscal fiction”. £19bn could be cut from public services”.