Johnson’s care tax ‘will hit poorest pensioners hardest’
BORIS JOHNSON’S health and social care levy will “clobber” pensioners who are only working past retirement age in order to “make ends meet”, Labour has warned, following a new analysis.
Research by the House of Commons library found that almost one in four pensioners due to be hit by the levy are among the lowest earners, compared to just 15 per cent of 25- to 44-year-olds.
Bridget Phillipson, the shadow chief secretary to the Treasury, said the data showed that the tax will “keep people working when they deserve to retire” and that many pensioners are already “not able to work full-time any more”.
Ministers decided to apply the new levy to pensioners in the face of claims that simply adding the tax to existing National Insurance Contributions (NICs) would lead to workers under 65, who currently pay the tax, subsidising pensioners, who are exempt from NICs.
From 2023, workers aged over 65 will pay the new levy, alongside under-65s whose NIC payments will increase in April. However, analysis by the Commons library, carried out for Labour, found that 24 per cent of over-65s earning over the £166-per-week NICs threshold were in the lowest fifth of such earners. Only 7 per cent were in the highest fifth of earners, compared to 24 per cent of 45- to 54-year-olds.
Ms Phillipson said: “Too many people keep on working past retirement age because it’s the only way they can make ends meet. The new tax makes it harder than ever for those on low earnings. Almost a quarter of working people over 65 who will be charged the tax are in the bottom fifth of the earnings distribution, many because they are simply not able to work full-time any more.
“Loading ever more taxes on to working people and keeping people working when they deserve to retire in peace is completely the wrong approach.
Labour would tax fairly, spend wisely, and get our economy firing on all cylinders, to ensure Britain’s pensioners can have the retirement they deserve.”
A Treasury spokesman said: “Our levy is due to raise £12billion a year for the NHS and social care. It is a progressive tax with those earning more paying more, and both businesses and individuals contributing. The increased funding for health and social care from the levy will benefit everyone, so it’s right that all who can contribute.
“The lowest paid with earnings below £9,568 will not pay anything.”