Work - Paying For It 2011

Work: £267bn

November 23rd, 2011

Work taxes cover income tax and national insurance – both currently generate around 40% of all tax. The Government needs to balance receiving income from taxes, to reduce the deficit and pay for public services, with keeping the tax system fair.

Stick to current plans but increase national insurance

National insurance is a contribution paid from income to maintain benefits such as the state pension. Raise it by 1%.
Pros & Cons

PRO Increasing national insurance will generate an additional £9bn per year to tackle the deficit and spend on public services.

CON As national insurance is charged at a blanket same rate for everyone there is no difference between low or high earners. Increasing it reduces the amount that everyone earns.
Stick to current plans

Maintain the government’s plans for 2012 by raising the amount earned before paying tax to £8,105 and keeping the 50% tax on those who earn over £150,000.
Pros & Cons

PRO Keeping the system as it is - particularly the top rate of tax - will maintain current level of public revenue to pay off the deficit.

CON This option does not offer any new help to those on low incomes despite the downturn in the economy.
Keep the top rate of tax and cut the lower rate

Continue to tax all earnings above £150,000 at 50% and allow individuals to earn up to £9,000 before paying any tax.
Pros & Cons

PRO Raising the amount earned before paying tax will help those on low-incomes while keeping the top rate retains the biggest tax burden on those who earn the most.

CON Despite costing the Government less than policy 1 this option would not dramatically change the amount of tax paid by low earners. Keeping the top rate may dissuade the wealthy from investing in the UK.
Cut income taxes for both high and low earners

Raise the amount earned before paying tax from £7,475 to £10,000 and reduce the tax paid by those earning over £150,000 from 50% to 40%.
Pros & Cons

PRO It is unclear whether the top rate of tax raises additional money as high earners find ways to avoid it. Raising the amount earned before paying tax increases incomes and rewards work.

CON This option would cost the Exchequer around £10bn per year at a time when public spending is squeezed.

Submit your own policy

Do you have a better idea for a policy? Submit it in the text field below. (You still have to select one of the above choices). All ideas will be compiled with the most popular getting published in the Youth Budget 2012.

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Work: £267bn

Stick to current plans but increase national insurance

Stick to current plans

Keep the top rate of tax and cut the lower rate

Cut income taxes for both high and low earners

Submit your own policy

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