The Courier & Advertiser (Perth and Perthshire Edition)
Hammond backpedals on controversial tax rise
U-turn on Budget’s NICs hike shows Tories in ‘chaos’
Philip Hammond has U-turned a key Budget plan to hike tax for the selfemployed just a week after unveiling the controversial measure.
Business groups welcomed the change but Labour said it showed the UK Government is in “chaos”.
In a letter to Conservative MPs, the Chancellor said he would not proceed with the planned 2% increase in Class 4 National Insurance Contributions (NICs), which rebellious figures within his own party claimed broke a manifesto pledged not to raise any taxes.
He said: “It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.
“In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”
Labour leader Jeremy Corbyn said the climbdown on a measure intended to raise £2 billion over the coming years, had left “a black hole in the Budget” and called for Prime Minister Theresa May to apologise to the country.
He told MPs: “It seems to me like a Government in a bit of chaos.”
Mrs May insisted the Budget announcement was “consistent” with the lock on tax rises put into legislation shortly after the general election, when the Conservative manifesto promised there would be no rises in National Insurance, VAT or income tax for the next five years.
Asked whether the Prime Minister or Chancellor made the decision to scrap the NICs rise, her official spokesman said: “It was a Government decision.”
No announcement on how to fill the gap left in the spending plan will be made until the second Budget of 2017, due in the autumn, said the spokesman.
Mike Cherry, chairman of the Federation of Small Businesses, said he was “delighted” by the announcement, while Stephen Herring, head of taxation at the Institute of Directors, branded the saga “chaotic”.
Adam Marshall, director general of the British Chambers of Commerce, said: “The NICs rise, together with the cut to dividend tax-free allowances, was not viewed favourably by entrepreneurs, so this move and pause for thought are welcome.”