Why is Number 10 pouring cold water on suggestions that National Insurance and Income Tax could be merged? This story bobs to the surface every few months: it was suggested that National Insurance could be renamed the ‘Earnings Tax’ in the 2014 Budget, but then nothing came of it. Now the Times has splashed on the suggestion that the Conservatives will promise to merge the two in their 2015 manifesto. The principle is sound: it makes the tax system less confusing and stops parties from hitting taxpayers by stealth. Much better to have one tax than an income tax and and earnings tax.
It’s also politically sound for the Tories as they have already said that they plan to plug the post-2015 black hole with spending cuts, not tax rises. They can then attack Labour for planning a ‘Jobs Tax’, and make it much easier for Ed Balls and co to hide any tax rises.
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