Submitted by Sestini & Co
| on Thu, 03/16/2017 - 17:03 | In Budget
, National Insurance
It started so well. A confident and assured speech from Chancellor Philip Hammond on Wednesday 8th March. He presented a seemingly-coherent strategy which included reducing the Government deficit by raising Class 4 NICs by 1% from 2018 and then a further 1%.
However, murmurings started just hours after the Budget speech. What about the party’s manifesto?
The Conservative party election manifesto – essentially a promise to commit – pledged in 2015 and recommitted to in 2016 includes the line “we will not raise VAT, National Insurance contributions or Income Tax”. This is reinforced by [we] “commit to no increases in VAT, National Insurance contributions or income tax”.
And so the climbdown started and just a few days after the Budget speech, on 15th March, the Chancellor was forced to write a letter to ‘clarify’ the position and reverse the decision to increase Class 4 contributions.
The rises would have brought an estimated £2bn in revenue to the government by 2022. No doubt the Autumn Budget will see a new way to raise those funds which were destined for social care and measures to reduce the impact of business rate increases. However, if the pledge to “commit to no increases in VAT, National Insurance contributions or income tax” is not overturned, there will need to be an innovative way to raise those funds.
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