It’s amazing what a change of name will do. All you have to do is invent
the term “National Insurance” and you can pretend that income tax rates are a
third lower than they really are.
It’s so easy to assume that the basic rate of income tax is 20pc. But
it’s not – it’s 32pc, once you add the 12pc NI rate to the 20pc income tax paid
by those who earn less than about £42,000 a year.
We are in the extraordinary situation where someone who earns, say,
£12,000 a year – barely a living wage in many parts of the country – hands over
a third of every extra pound to the Government.
But although calling the basic rate of income tax 20pc is quite a
whopper, it’s not actually the biggest tax lie of all.
That dubious accolade belongs to the claim, spouted by politicians of
every hue, that their plans to raise the personal allowance, currently £10,000,
will “take millions of people out of income tax
altogether”.
In fact anyone who earns more than £7,956 a year hands over 12pc of what
they earn, although this tax wears its “National Insurance”
disguise.
At least the Government has the decency to be embarrassed about it. If
you don’t know at what point you start paying NI, don’t bother visiting HMRC’s
website to find out. In a table headed “Rates and allowances: National Insurance
contributions” you will be confronted with such curiosities as “Lower earnings
limit, primary Class 1”, “Upper accrual point”, “primary and secondary
thresholds” and so on (and all as weekly, not annual,
amounts).
Nowhere could I find a simple statement of when you start paying NI. On
the equivalent tax table, by contrast, the “Personal Allowance for people born
after 5 April 1948 – £10,000” is proudly displayed right at the
top.
The NI sleight of hand allows governments to claim that Britain is a
low-tax country and that the poorly paid are especially lightly taxed. Both
claims are fraudulent. Richard Evans -
Telegraph.
