MSP claims NI hike will see the poorest subsidise wealthy

Society’s poorest people will subside the wealthiest if a new insurance tax hike is introduced, Rutherglen’s MSP has claimed.

Clare Haughey made the comments in response to plans by Prime Minister Boris Johnson for workers and businesses to face a 1.25 percentage point increase in National Insurance from April 2022.

The UK Government has argued that the tax hike is required to tackle the social care crisis in England.

Although health and social care is devolved to Scotland, National Insurance is a reserved UK tax, therefore workers in Rutherglen and Cambuslang will also be affected by the plans to raise the tax.

The increase to National Insurance – which has controversially broken a Conservative manifesto commitment – will raise £12billion a year across the UK, according to the Prime Minister.

Ms Haughey has now argued that the tax is regressive.

She said:“It is astonishing that workers and businesses in Scotland are being forced to pay extra National Insurance to fix the social care crisis in England – a mess of Westminster’s own making.

“This Tory tax will penalise care workers and shop staff in Rutherglen and Cambuslang, while millionaires with unearned wealth will contribute nothing –unfairly punishing families in Scotland, young people, and the lower paid.

“At a time when we should be strengthening support, the Tories are set to slash £20 per week from Universal Credit and now implement this regressive tax increase which will leave the poorest in society subsidising the wealthiest.”

At the moment, workers pay 12 per cent National Insurance on earnings between around £9500 up to £50,000.

Unlike Income Tax which increases as wages go up, anything earned above £50,000 is taxed at just 2 per cent for National Insurance.

For those with an annual salary of £20,000, they currently pay £1,251 in National Insurance – this will rise by £130 from next year.

For those earning £50,000, the extra cost will rise by £505.

Announcing the plans, Mr Johnson said:“You can’t fix the Covid backlogs without giving the NHS the money it needs.

“You can’t fix the NHS without fixing social care.

“You can’t fix social care without removing the fear of losing everything to pay for social care, and you can’t fix health and social care without long-term reform.”