Gummer's plea to rename National Insurance
- 27 February 2014
- From the section England
After championing transparency on your tax bill, Ben Gummer's new plan is to rename National Insurance.
Brought in by the indomitable Lloyd George in 1911, National Insurance contributions were introduced to provide insurance against illness and unemployment and it's often said that 'it pays for the health service'.
The reality, of course, is that it doesn't and that's what the MP for Ipswich wants to address.
"A sensible first step would be just to be honest about what National Insurance is, which is a tax. It's a tax on your earnings and we should just be plain about that.
"Since 1911 the the link between welfare and benefits and National Insurance has been broken and now it just goes into the pot like everything else does."
Mr Gummer wants National Insurance to be called the Earnings Tax and he has proposed the change in the House of Commons.
National Insurance is paid by all workers aged between 16 and retirement age. We pay 12% per cent on earnings between £149 and £797 a week; after that you pay an extra 2%.
Mr Gummer says there is hardly any difference between National Insurance and Income Tax.
"I think we should be straighter as politicians with tax payers about how we raise money from them and how we spend it and a little sign, a little bit of movement in that direction would just be being straight about what National Insurance is, by calling it a tax.
"It walks like a tax, it quacks like a tax and we should call it a tax."
There are suspicions though, that the move might in the longer term lead to a rolling together of National Insurance Contributions and Income Tax.
Pensions are subject to Income Tax but not to National Insurance Contributions. Some question, if the two are merged, whether this could lead to the government increasing the taxation of pensioners.
Mr Gummer has it all in hand:"What I propose is no change in the rate, or how much people are charged, merely the name and if they were merged in the future, there should be special rates for pensioners so they don't lose out."
Could it be that Mr Gummer has the ear of the Chancellor? The budget is only weeks away...
Mr Gummer hints:"I hope the Chancellor will take it on, he's looked kindly on my projects in the past and I hope he will do so again."