Merging income tax and national insurance

posted by
March 21, 2011
Adam Smith Institute
by Tom Clougherty  
Posted in Commentary

"I am relieved to hear that chancellor George Osborne is considering merging income tax and national insurance, even if the changes are likely to be slow in coming. The division between these two direct taxes on income tax once (just about) justifiable on the contributory principle -- that payment of certain amounts of national insurance made you eligible for certain benefits. That justification no longer holds to any great extent, and if the state pension is changed as planned it will evaporate altogether. The only remaining reason to keep income tax and national insurance separate is for political, presentational reasons: to stop people from cottoning on to just how much tax they are paying." (03/21/11)

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