Boris Johnson will raise taxes to deal with coveted and welfare crises

LONDON – UK Prime Minister Boris Johnson announced plans to raise taxes on Tuesday to fund health care and reforms to the country’s social care system.

Starting in April, the Johnson government wants to introduce a new health and welfare rate of 1.25% on UK-wide revenue. It will start as an increase in the existing national insurance rate (a current income tax) and become a separate income tax in 2023.

The tax increase will increase by almost £ 36 billion over the next three years, according to the government, with the tax money going directly to the UK health and social care systems.

The plans require the approval of Parliament before they can be incorporated into law.

Speaking to House of Commons lawmakers on Tuesday, Johnson said it would be “wrong to say we can afford this pandemic without making the difficult but responsible decisions about how we fund it.”

The prime minister said that as the new type of tax would involve a permanent additional investment in health and social care, it would be “irresponsible” to cover the costs through more loans.

“Some will ask why we do not increase income tax or capital gains tax. Income tax is not paid by companies, so the entire burden would fall on individuals, roughly doubling the “amount that the basic taxpayer could expect to pay. And total income from capital gains tax amounts to less than £ 9 billion this year,” he told politicians.

“Instead, our new tax will split the cost between individuals and businesses, and everyone will contribute according to their means. Those who earn more will pay more. And because we also increase the rates of dividend taxes, we will ask for a better business. Owners and investors also make a fair contribution. In fact, the 14% with the most profits will pay about half of the revenue. “

By raising taxes by 1.25%, the Johnson administration intends to address the crises in the financing of social assistance and the waiting lists for the treatment of the National Health Service, the latter of which has been spiral amid escalating pressure on health care services throughout the Covid-19 pandemic.

Under Britain’s national insurance system, workers and employers pay a fee that finances certain social assistance programs, such as state pensions, sickness pay and maternity pay. Older people on the state pension do not pay the tax, which effectively reduces their tax bill.

For workers earning between £ 797 and £ 4,189 a month, national insurance payments account for 12% of their income. Additional earnings in excess of £ 4,189 per month are taxed at 2%. These payments are made separately from income tax.

The NHS in England will receive a £ 5.4 billion cash injection over the next six months to bolster its response to the Covid-19 crisis, the government announced on Monday. Of this funding, £ 1bn will be used to reduce the backlog of treatments created by the pandemic.

In August, an analysis by The Nuffield Trust found that almost 1.2 million people in England had to wait more than six months to access vital NHS services such as cardiology and brain surgery.

Johnson also announced Tuesday that new social care reforms will include a limit on how much people pay for care during their lifetime. From October 2023, this amount will be limited to £ 86,000, although it may not include the price of accommodation in nursing homes.

Currently, people in England have to pay for their own care if they have savings and assets in excess of £ 23,250, which means social care is rarely funded by the state.

People with savings and assets valued at between £ 20,000 and £ 100,000 will be eligible for “some means-tested support”, a form of assistance currently only available to people with assets valued at between £ 14,250 and £ 23,250.

A shake-up of the country’s social care system has been expected, which is often forced to sell their homes to cover the costs of care.

In his first speech as prime minister in 2019, Johnson said his government would “solve the social care crisis once and for all,” promising to “give all older people the dignity and security they need. they deserve it “.

However, the prime minister’s plans have been criticized by some lawmakers in his own Conservative party, many of whom say he would break the party’s promises before being elected to form a majority government.

Ahead of the country’s last general election in 2019, Johnson made a promise to the Conservative manifesto not to raise the rate of income tax, VAT or national insurance.

House of Commons leader Jacob Rees-Mogg wrote in his column for the Sunday Express over the weekend that Johnson’s reverse turn on taxes could cost Conservatives votes. Based on the famous quote from former U.S. President George HW Bush: “Read my lips: there are no new taxes,” Rees-Mogg argued that “voters remembered those words after President Bush I would have forgotten. “

Business Secretary Kwasi Kwarteng, Commerce Secretary Liz Truss, and Justice Secretary Robert Buckland are also concerned about the plans, as are many conservative lawmakers who are not members of Johnson’s cabinet, The Guardian reported .