Rishi Sunak ‘is considering’ raising national insurance threshold to help Britons cope with cost crunch following his £12bn tax raid
- Rishi Sunak is said to be planning to raise the rate at which workers pay NI tax
- The Chancellor may be attempting to soften the blow of a 1.25% tax increase
- Experts described it as the ‘worst-timed tax rise in history’ as inflation soars
- Tory MP Sir Iain Duncan Smith said the economy could end up in stagflation
National insurance thresholds could be raised to soften the blow of Rishi Sunak’s £12billion tax raid.
The Chancellor is said to be considering an increase in the rate at which workers start paying the levy in order to ease the burden on the low paid.
While the threshold for paying income tax has increased rapidly in recent years to £12,500, the starting level for national insurance has lagged far behind.
Most workers currently start paying NI when their income hits £9,568.
Mr Sunak has come under intense pressure to drop the 1.25 percentage point increase in the tax, which has been rebranded as the ‘health and social care levy’.
Experts have described it as the ‘worst-timed tax rise in history’, warning it will fuel inflation and hit family incomes at the least opportune moment.
British Chancellor of the Exchequer Rishi Sunak speaks at Conservative Party Spring Conference in Blackpool. He is said to be considering an increase in the rate at which workers start paying National Insurance Tax
But Mr Sunak insisted at the weekend that the tax raid would go ahead to fund action on tackling the post-pandemic waiting lists in the NHS.
Yesterday former Tory leader Sir Iain Duncan Smith urged the Chancellor to postpone the tax rise altogether but added that a rise in thresholds could help to limit the damage.
‘Tinkering with the thresholds will obviously help but the reality is that the Chancellor should be dropping this tax,’ said Sir Iain.
‘We should be going for growth or we are going to end up with stagflation. Instead we are placing another burden on families and businesses.’
Torsten Bell, chief executive of the Resolution Foundation think-tank, said that ‘good news on the public finances’ meant the Chancellor had significant headroom to act.
Mr Bell added that raising NI thresholds would ‘help those on middle incomes most’.
He told BBC Radio 4’s Today programme that Mr Sunak should prioritise an increase in pensions and benefits to help those on the lowest incomes to cope with the biggest squeeze on family finances since the 1970s.
‘If he’s got more money to spend then raising NI thresholds… should be the priority,’ added Mr Bell.
Mr Sunak is also finalising plans for a temporary cut in fuel duty to help offset record rises in petrol and diesel prices amid the Ukraine crisis.
Mr Bell said a fuel duty cut, reported to be about 5p a litre, was ‘an absolute certainty to be a big part of the package’.
However, No 10 stressed that the Chancellor would be unable to offset fully the huge rises in costs.
The Prime Minister’s official spokesman said: ‘Obviously the Government cannot deal with all of the challenges when they come on a global scale.’
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