Despite party obstruction, Johnson announced a tax increase of 36 billion pounds in the health system over the next three years.

Published: Sep 8, 2021 07:01

British Prime Minister Johnson announced tax increases on Tuesday (September 7) to finance health care and the reform of the country's social care system.

Mr Johnson plans to raise the national insurance tax (NICs) rate for employees, employers and self-employed across the UK: 12 per cent, 13.8 per cent and 9 per cent respectively from 2021 to 2022 and 13.25 per cent, 15.05 per cent and 10.25 per cent from 2022 to 2023.

Starting from 2023-2024, the social care (Levy) tax will be levied independently, with 1.25 per cent levied on employees, employers and self-employed, and the national insurance tax rate will return to the 2021-2022 level of 12 per cent, 13.8 per cent and 9 per cent.

According to the government, the new tax, which will come into effect in April 2022, will raise nearly 36 billion pounds over the next three years and will go directly to the (NHS) of the National Health Service and the social care system.

These plans still need to be approved by Parliament before they can be written into law. Johnson told lawmakers in the House of Commons on Tuesday, "if I say we can pay for the pandemic, but we don't solve the problem of funding, it's wrong." We must make this difficult but responsible decision. "

Johnson said that if NHS is not provided with the necessary funds, it will not be able to solve the backlog of the novel coronavirus epidemic. "the government has been evading this issue for decades and cannot procrastinate any longer. "

It is "irresponsible" to meet through more government borrowing, Johnson said. "some people will ask why we don't increase income tax or capital gains tax. The income tax is not paid by the enterprise, so the whole burden will fall on the individual. "

"our new tax will share the cost between individuals and businesses, and everyone will pay according to their own income. Those with higher incomes will pay more. As we are also raising tax rates on dividends and demanding contributions from wealthier business owners and investors, those with the highest incomes will pay about half of their income. " The third dividend tax will be raised by 1.25% to 8.75%, 33.75% and 39.35%, respectively.

Under the UK's national insurance scheme, employees, employers and self-employed are required to pay taxes to finance certain benefits, such as state pensions, statutory sick leave pay and maternity leave pay. People who are older than the state pension do not have to pay taxes, which actually lowers their taxes.

Employees earning less than £797a month are not required to pay national insurance premiums. For employees earning between £797and £4189 a month, national insurance premiums are 12 per cent of their income, and extra income over £4189 is taxed at 2 per cent.

Johnson will also set a cap on how much people can pay for health care. From October 2023, this amount will be limited to 86000 pounds.

Currently, if savings and assets exceed £23250, you have to pay for your own care, which means that social care is rarely reimbursed by the state.

Although many government officials and politicians have expressed dissatisfaction with Johnson's tax increase, private surveys show that British society is more tolerant of tax increases to cover social care fees. A poll released on July 20th showed that Britons of all four ages were much higher than dissenting on whether to support an increase in the national insurance tax rate from 12 per cent to 13 per cent for autonomous care for the elderly.

Britons have been waiting for the reform of the country's social care system for a long time, and people are often forced to sell their houses to pay for the care. In his first speech as prime minister in 2019, Johnson said his government would permanently solve the social care crisis and vowed to give every elderly person the dignity and security they deserve. (although he promised not to raise taxes before the election)

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Despite party obstruction, Johnson announced a tax increase of 36 billion pounds in the health system over the next three years. - Shanghai Metals Market (SMM)