Abolish Employer's contribution towards National Insurance

[PaulJRobinson]

This pull request has been automatically generated by prose.io.

[Floppy]

How is the NI shortfall made up? I'm all for simplifying, but my concern is that this would negatively impact the social welfare budget.

[philipjohn]

Given that we have lots of proposals that will impact the budget I'd suggests it's better to adopt those policies we feel are sensible and proportionate then later down the line we can crunch the numbers and tweak the policies as necessary at that point.

[frankieroberto]

Isn't the distinctions between the employer and employee contribution essentially arbitrary (given that both parts ultimately come from the employer)? Not sure I understand the aim of this.

Also 'a tax on jobs' is unhelpful language IMO.

[Floppy]

Yes, I'd want to see numbers on this one. I agree that the employer/employee distinction seems arbitrary, but I don't know enough.

[philipjohn]

"given that both parts ultimately come from the employer"
Not really, both the employer and employee pay NI contributions. See HRMC on this.

I know this means that there's less income, but I agree with the principle so I'm a 👍 with the caveat that we will need to look at whether we increase employee NI or corporation tax (or something else) to pay for it.

[Floppy]

I'm currently a 👎 on this until without clarification. I'm all for simplifying the tax system, but is the idea that:

1. employers will not pay the NI contribution, keep more money, and less goes into the NI pot?
2. employers pay the same amount overall, but NI is collected through corp tax instead?
3. employees receive more money and pay the NI instead?

Option 1 would worry me. Where does the "tax on jobs" thing even come from? Employing people costs money, this is just part of that, right? Is it purely a psychological thing that paying an insurance contribution to employ someone feels bad, or are there figures that mean that the financial burden falls unevenly on (for instance) small companies?

I need evidence on this one, basically.

[tmtmtmtm]

Not really, both the employer and employee pay NI contributions. See HRMC on this.

That's a rather arbitrary distinction. It's derived from the amount of wages, and almost always deducted at source. It makes essentially no difference if (to pick random numbers), the employee contribution was 5% and the employer 15%, vs employee 15%/employer 5%, vs 10% each, vs 20%/0% in either direction.

[philipjohn]

It's hugely important. Wages are usually quoted in gross terms, but the proportion of NI paid by the employee is factored into lending decisions, affecting mortgages and other forms of borrowing.

The whole system of NI contributions is unnecessarily overcomplicated. All this PR really does it to simplify it. That's going to reduce the overhead of managing staff for businesses (smaller ones affected disproportionately), and make administration at HMRC easier, lowering costs for the state.

[tmtmtmtm]

How wages are quoted is a fair point, and I'm certainly all for simplifying tax systems — but these seem like different arguments from "a tax on jobs [that] discourages employment", and that "abolition will boost the level of employment as well as wages". Those claims either need a lot more evidence, or, if they're not crucial to the point, should be dropped.

[Floppy]

My vote on here is better as a ✋, not a block. Under the new rules, this should be closed though. Does anyone want to move it on? If not, it'll be closed shortly.

[Floppy]

This proposal is open for discussion and voting. If you are a contributor to this repository (and not the proposer), you may vote on whether or not it is accepted.

How to vote

Vote by entering one of the following symbols in a comment on this pull request. Only your last vote will be counted, and you may change your vote at any time until the change is accepted or closed.

vote	symbol	type this	points
Agree	👍	:thumbsup:	1
Abstain	✋	:hand:	-1
Block	👎	:thumbsdown:	-1000

Proposals will be accepted and merged once they have a total of 2 points when all votes are counted. Votes will be open for a minimum of 7 days, but will be closed if the proposal is not accepted after 90.

Votes are counted automatically here, and results are set in the merge status checks below.

Changes

If the proposer makes a change to the proposal, no votes cast before that change will be counted.