Last week those in charge of some of the UKs largest businesses wrote to the Telegraph supporting the Conservatives’ pledge to halt Labour’s planned 1 per cent rise in National Insurance. This may look like good news for ordinary voters but National Insurance payments are a crucial source of finance for vital public services, pensions and payments to those who are sick and unemployed.
38 Degrees have launched a site allowing you to message some or all (you can choose who) of the 68 business leaders who have signed the letter argue that the rise in national insurance could threaten jobs and put the economic recovery at risk. These are the leaders who have failed to mention that the rise in National Insurance will also bring down their profits as their financial contributions as employers will increase.
The chief executives of major companies may not rely on the public services funded by national Insurance. But it is likely that their customers, who are people earning normal salaries, will.
Email the business leaders to urge them to change their mind.
Ultimately it is the worker who pays both the employers and employees national insurance. Where the government takes the money from is irrelevant. If a job is profitable at £10 p/h and the government takes £3 p/h in taxes, it doesn’t matter if it takes £3 from you, £3 from the company or any split between the two, you can receive at most £7.00 – unless the employer wants to lose money. In the short run the employer will bare the brunt of this tax increase as they are unlikely to reduce the employees wages by the tax increase immediately, but over the long run the taxation will be borne 100% by the employee. Now, that may well be fine with you, but I just wanted to make the point that in the long run, profit margins will be unaffected.