The UK government will enforce a tax hike plan to fund the NHS. The Prime Minister is in a situation where his authority is weak. To achieve his levelling promises and save his reputation, he will increase the National Insurance in April. However, this move could put more financial pressure on British households.
UK Government to Hike Taxes by 1.25%
Britain’s Chancellor of the Exchequer, Rishi Sunak, has announced a multi-billion-pound investment in health, education, infrastructure, and other areas. He has mentioned that the government will achieve its “levelling up” pledges. The chancellor unveiled the Health and Social Care Levy. Britain’s Prime Minister Boris Johnson has said the UK government funds health and social care services.
The UK government will increase taxes on earned income by 1.25 percent from April 2022 for the next three years. In September 2021, the National Health Service published a report on the continuing cost of COVID-19 required by the NHS. The health organization demanded changes to manage the backlog of cases as the outcome of the pandemic. The UK government will raise 12 billion pounds a year to tackle the health backlog. Tax hikes help ease the pressure on the NHS and will go into the social care system.
Critics Oppose the Tax Hike Plan
Nevertheless, the UK government’s tax hikes for health and social care is a controversial issue. As the UK’s inflation hits its highest rate for 30 years, households face price rises in all fields. Several MPs spoke against the tax hike, and some of them called for a delay of National Insurance rise. Keir Starmer warned that the tax hikes would target young people, workers, nurses rather than people with higher incomes. The Labour Party Leader said that many of the problems in the NHS had existed before the pandemic. He accused the UK government of “putting a sticking plaster over the wounds“. The British Chambers of Commerce has said the plan for a tax hike would be an obstacle to job growth. Make the UK, a manufacturing trade group, has said this is illogical to introduce this plan at the wrong time.
PM Rules Out Delaying Tax RisesÂ
Many critics accused the PM of breaking pledges he made in 2019. Johnson’s 2019 election manifesto promised not to increase taxes, but now PM will raise money via tax hikes. The opposing MPs have said that the prime minister ignores the struggling families. Despite the call for reconsidering the April tax hike, PM has insisted the plan would go ahead. Boris Johnson has said no Conservative government wanted a tax hike, but borrowing money would not be the solution.
The UK government has acknowledged that PM would break the promises of the 2019 general election. However, Westminster has said the global pandemic was the main reason for the tax hike. PM is now promising to make a fantastic NHS using the April tax hike. Boris Johnson has also argued that the UK government needs the money to invest in the NHS.
Wages Should Increase 9%Â
The government’s last March tax hike was already the biggest since 1993. A one-year increase of 1.25 will take effect in the coming April so that the take-home pay will drop.
Currently, employees pay 12 percent of their income to the National Insurance, which will increase to 13.25 percent. Self-employed Britons will pay 10.25 percent of their earnings to National Insurance, and employers will pay 15.05 percent.
As inflation will hit 7 percent by April 2022, low-income families will have to cope with more pressure. Institute for Fiscal Studies (IFS) has calculated that earnings should increase by 9 percent to prevent post-tax profits from falling. According to the ONS analysis, the prices of cheaper goods are growing faster than other products. The poorer households rely more on more affordable products so that the average inflation rate will be higher for low-income families.
Employers Can Offer 3% Wage Raise.Â
British employers who suffer from a workforce shortage will give a 3 percent pay rise in 2022. Real wages fell by 1.4 percent in 2021, the most significant decrease since 2014. There are high intentions for recruitment among the industries and businesses and employers have raised wages. A survey by YouGov for the Chartered Institute of Personnel and Development revealed there are huge job vacancies. Around two-thirds of employers think they cannot fill their job vacancies in the coming six months.
Moreover, the high inflation rate puts pressure on businesses and reduces the ability to offer pay increases. The 3 percent increase is the highest rise in a decade, but it is below the inflation rate. Although employers are offering a higher amount of money to employ people, it is less than the IFS recommendation.
Johnson’s Plan Saves His ReputationÂ
Johnson’s political future is uncertain as police investigate PM’s Partygate scandal. However, he insists on a tax hike to raise 12 billion pounds for national insurance and social care services. He pursues the plan to dump the idea about his weakness and save his reputation. The UK government has revealed its “levelling up” strategies for post-Brexit disorders by spreading opportunity and prosperity to all parts. Boris Johnson persists in his tax hike plan to reaffirm his authority. This plan will fund a permanent increase in public spending on the NHS and social care reform. Westminster will complete its strategy to offset the country’s cost of living crisis. During the pandemic, a majority of politicians supported higher spending on health. Johnson has claimed the Conservative party is the party for the NHS to enforce the National Insurance plan.
Conclusion
Brexit Britain has suffered the pandemic financial pressure with a workforce shortage and higher spending. The UK government has struggled to manage the health costs and Brexit deregulations throughout the last two years. However, British households have had economic challenges as the inflation rate is rising in the UK. The UK government is planning a tax hike by April to help clear the NHS backlogs. It plans to increase the National Insurance to move the money into the social care system. The critics have asked the prime minister to scrap the plan or delay its enforcement. With the Bank of England prediction of 7 per cent inflation, the IFS has calculated that a 9 percent real wage rise would prevent post-tax pressure. British employers increase wages by 3 percent in 2022, so many British households will feel the financial burden.
