The government has been criticized for increasing tax pressure on working families as they face welfare cuts
Younger workers and households in need of welfare will be hardest hit by tax hikes, which are unlikely to hit wealthy retirees, the government has warned.
The Resolution Foundation’s left think tank said Chancellor Rishi Sunak is funding welfare reforms at the expense of the youngest by increasing social security (NIC) contributions.
While the think tank welcomed the decision to apply the tax increase to working retirees, it argued that it was still unfair because of the significant increases for those beginning their working lives.
It also warned that the measures could discourage companies from hiring employees on a permanent basis due to higher NIC payments from employees, thereby exposing workers to more unstable working conditions.
The average 25-year-old would pay an additional £ 12,600 over the course of their working life from the NIC increase, compared to nothing for a retiree dependent on retirement income, the think tank said.
The Joseph Roundtree Foundation (JRF) estimates two million low-income families facing impending benefit cuts pay NIC £ 100 more annually.
“These additional costs hurt these families, who face a historic £ 1,040 cut in annual income if Universal Credit and Working Tax Credit are reduced on October 6th in less than a month,” Peter Matejic, Assistant Director of Evidence and Impact said.
Labor leader Sir Keir Starmer argued that the cost should be borne by “those with the broadest shoulders” rather than by “a tax hike for young people, supermarket clerks and nurses”.
Liberal Democrat leader Sir Ed Davey said: “Whether young working-class families, caregivers or small business owners, those who have been disastrously failed by the Conservatives during the pandemic are now being asked to take the bill.”
Prime Minister Boris Johnson was asked during a press conference on Downing Street how fair the tax hike was.
“(With) the measures we are laying down today, we are protecting everyone’s property up to £ 100,000, and if you remember before, it was only £ 23,000.
“It’s more than four times the protection, so people across the country, wherever they are, can get help with assets of up to £ 100,000.
“We’re raising the threshold, the minimum you have before being asked to pay, and we’re raising that from £ 14,000 to £ 20,000 – so this is a very progressive move.
He added, “It is right that those with the broadest shoulders carry the greatest burden, and that is exactly what we do.”
He said dealing with the pandemic was “enormously expensive, but it was the right thing too, but it is also the right thing now to take sensible, fair and responsible steps to get the NHS back on its feet and” that is , what we do.”
Mr. Sunak said, “None of us standing here would like to get into a situation where we are raising taxes.”
Mr. Sunak replied, “There is no perfect way to raise money. I won’t pretend there is one. We have set out why our approach, this new health and social tax, is the best way to do it.
“That means we can do this on a British basis because we are a government that believes in the Union and the strength of the Union – that way we can make sure this becomes a reality.”