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NI increase condemned as 'tax on jobs'

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2nd Mar 2010
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A raft of business groups have started a petition against the government’s planned 1% increase in National Insurance contributions, which they claim will force employers to recruit fewer staff and even lead to job cuts.
 
The petition, which was launched yesterday, was backed up with a letter to the Daily Telegraph, calling on the government to work with them to find alternative ways of closing the UK’s budget deficit.
 
The letter said that businesses across the country understood that it was imperative for the government to begin the difficult job of repairing the public finances. “But this NICs increase is a ‘tax on jobs’ and will discourage companies of all sizes from taking on new staff at a critical point in our economic recovery,” it claimed.
 
Additional taxes on businesses, and especially small-to-medium companies, “must be a last resort, not an easy way forward”, the letter added.
 
The business groups involved comprise the Chartered Institute of Personnel and Development (CIPD), the British Chamber of Commerce (BCC), the CBI, the British Retail Consortium, the Forum of Private Businesses, the Federation of Small Businesses (FSB), the Institute of Directors and the Recruitment and Employment Confederation (REC).
 
The BCC believes that employers face a potential bill of £14 billion between 2010 and 2014 if National Insurance contributions are increased from April 2011 as scheduled. The FSB claims that 57,009 jobs in small businesses could be lost as a result of the move, while the CIPD claims that it will lead to 12% of employers taking on fewer staff and 8% cutting posts.
 
Kevin Green, chief executive of the REC, said: “2010 is witnessing the first stirrings of a recovery in the labour market, with employers starting to feel more confident about recruiting. Increasing taxes on business will choke off recovery and will hinder getting people back into work.”
 

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By johnjenkins
02nd Mar 2010 17:20

Employers NIC

Why not go the whole hog and petition to get rid of Employers NIC.????????

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By User deleted
02nd Mar 2010 19:29

Ok, so what should rise instead?

Business can't have it every way.

We need a credible, detailed deficit reduction plan... but we don't like what you have set out in the detail already.

We need a credible, detailed deficit reduction plan... but we want you to reduce corporation tax.

We don't want a 1% rise in NICs... but we are are not really prepared to say what should rise other than we suspect VAT would be better because that is regressive and will affect us least (of course, our friends in retail may suffer but hey, ho).

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By johnjenkins
03rd Mar 2010 09:50

Tax Rises

Why should there be any compensatory rise?????????? Its about time this Government does what we have to do and live within its means. The more they get the more they waste!!!!!!

Employers NIC has always been a tax on jobs and should be aboloished. If Governments need more money they should raise Income tax and corporation tax (which I believe should be at the same rate) that way we can all see which government gives value for OUR money.

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By User deleted
03rd Mar 2010 10:11

We have a problem

There is a deficit of £178bn. If anyone believes that can be reduced without tax rises and only with spending cuts then, respectfully, I disagree. The 1% NICs rise raises around £9bn I think so I do think you would need to fill that hole or cut the existing NHS budget by about 10% above any planned spending reductions on non-frontline NHS services. And, no, marketing, quangos and all the rest of it that is so often trotted out won't cover that. Or you could raise VAT to 20% but that is horribly regressive and is likely to be the tax rise we see the other side of the election. Getting £9bn from a rise in corporation tax would mean abolishing the SCR and having a single rate in excess of 30%. I imagine businesses will love that. 

This really does call for a grown up debate and hard choices. One of the reasons the Government may be reluctant to set out a credible plan before an election is because it isn't clear the electorate are really prepared to have that grown-up debate.

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By johnjenkins
03rd Mar 2010 11:43

Not Grown Up??????????????

Where are you coming from anonymous????????

I presume it wasn't "grown-ups" who got us into this mess!!!!!!!!

The Government won't give clear indications because they don't have any - nor do the Tories. Different things are bandied about to see what the public reaction is. Those with the least reaction will be used to reduce the deficit unless, of course, Mr Brown wins the election with an overall majority, then he can do what he likes. Then we will need help from "grown ups".

I

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By cymraeg_draig
03rd Mar 2010 23:02

ALL taxes are a tax on jobs

Like everything this wretched government does this is just another con-trick.

Come the election they will bleat about how they "havent raised income tax" (when in fact they have by not increasing allowances in line with inflation). 

They will claim that Brown has "saved the world" (again) when what we really want to know is who will save us from Brown.

This is a tax on jobs, but then again so is increased VAT as it reduced demand, so is increased income tax because it leaves less for people to spend therefore reducing demand.

The bottom line is ANY tax increase however its done takes money out of circulation, cuts demand, and eventually costs jobs (except civil servants), so, the ONLY way to get Britain back on its feet is to drasticaly reduce government spending and CUT taxes to stimulate demand and growth in the economy.

Tax credits to families who really dont need them (say over £15,000 a year) should be scrapped.  Subsidies paid to the EU should be stopped.  Immigration must be severely curbed or even reversed. Benefits should be properly targetted at the sick & the elderly, not the workshy and the idle. Civil servants gold plated pensions should be aboloished.  Councils should be made to supply core services and scrap all the politically correct "gay pride" or "winterval" festivals and the like.  Lets have pot holes repaired and schools repaired before they pay for such lunacy.

For once business leaders are right (even if probably for the wrong reasons) this and indeed ANY tax increases should be scrapped and the economy managed for once.

 

 

 

 

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By markfd
04th Mar 2010 08:49

Businesses are right...

...making it more expensive to employ UK citizens, or better to replace people with equipment is clearly bad for jobs.  They are just seen as a soft target because they don't vote and it's all part of the government's desperate attempt to hoodwink voters into thinking that the huge fiscal problems they created can be solved by having 'someone else' pay.

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By johnjenkins
04th Mar 2010 11:46

WD

Unfortunately, Welsh Dragon, you are talking common sense which doesn't go down too well with this Government.

Mr Brown has swopped common sense and flexibility for compliance and rigidity.

Come on DC this is your chance to get this country back on its feet. Take it or rue the day.

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By Phil Rees
05th Mar 2010 16:40

"Posted by cymraeg_draig on Wed, 03/03/2010 - 23:02"

Been at the Penderyn had you?

Or are you one of the very small % of Welsh poeple who will vote for "Dave" Cameron, the Eton boy?

 

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By cymraeg_draig
06th Mar 2010 09:45

Drunken sheep

Now would I drink that before posting?  I might need one AFTER reading some of the posts on here, but not before.

Seriously, I think a lot of Welsh people, like anyone else, will simply vote for anyone who they think has the best chance of ousting McDoom.  To be honest I'd elect a dead sheep if I thought it would stop Labour forming the next government. In fact looking at the cabinet I think a few dead sheep did get elected last time around.

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By User deleted
06th Mar 2010 11:24

Hmm...

I'm a believer in people tending to get the type of Government they deserve, for better or worse. If as an electorate we are unable to cope with serious issues then we will get a Government that won't be able to deal with them. If as an electorate we are unable to seriously question and consider polcies and rationales then we will get a Government that doesn't need to provide serious or considered answers. If as an electorate we enage in the cult of personality then we will get a Government of spin over substance. That, it seems to me, is a choice we need to make and I am very concerned that the most important election in 20 years will be decided by an attitude of "change for change's sake". That is no basis to ever make a judgement on electing a Government and certainly not when the next 10 years will be one of the most difficult for this country outside of war time.

I'm also surprised the so-called professional people in the accountancy and tax profession would reduce this thread to naked political comment rather than think about the issues at hand. It's a shame but I suppose it does reveal that accountants aren't economists and care needs to be taken when they enter into the wider economic debate. Economists don't get it right and diasgree all the time but at least it is on the basis of some reasoned thought, rather than the stuff I'mmore used to seeing on the Sun's comment page or BBC's Have Your Say.

Bak to the OP, the best analysis I have seen about this is from Mark Lee and I would encourage people to read it. http://taxadvicenetwork.blogspot.com/2010/02/vat-will-go-up-to-20-within-months.html. It is understandable business don't like ANY taxes or ANY regulation. That is not news. It is also understandable, I would have thought, that means they will forever lobby vociferously against ANY tax rises or ANY regulation. But we have tax and regulation for a reason. And it comes down to difficult choices- increase national insurance or increase other taxes. It is not credible to say we are in a position to say there can be NO tax rises or Employers' NICs should be abolished (and remove tens of billions from Government revenues, driving the deficit up further still and require even worse spending cuts).

 Now, the question is do people want to have that discussion- over an issue that will be faced by ANY Government- or do they want to reduce it to references to "McDoom"?

 

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By cymraeg_draig
06th Mar 2010 12:35

Thank you for the Party Political Broadcast

.

However, it simply proves you have not read all comments, if you had you would see that ALL taxes are in fact taxes on jobs.  ALL taxes take money out of the economy and damage growth

The only answer to the current defecit is NOT to increase taxes, but to decrease expenditure. 

Drastic change is needed in our attitudes to public expenditure.  Certainly ALL none essential services should simply be ceased, whether paid by government or local authority.  Police should uphold the law and stop the politically correct rubbish that takes so much of their time.  The NHS should heal the sick, not provide employment for layer after layer of "administrators".  Roads should be repaired with money saved by getting rid of the excessive and counter productive traffic control schemes.  The armed forces should be given the equipment they need and allowed to fight wars that concern Britain, instead of bailing out the Americans. And above all, the Euro Monster should be told to take a hike. 

Pensions and benefits should be increased, BUT, only paid to genuine claimants.  Immigration should be stopped, and reversed.  And serious simplification of the tax system would lead to an easier and fairer system to administer, and less need for the vast numbers of tax inspectors.

Labour have proven themselves to be incapable of running the country, and incapable of telling the truth, so they must be replaced. 

Britain needs a strong determined leadership which will not bow down to either Europe or America.

 

 

 

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By User deleted
06th Mar 2010 13:11

Hmm..

I'm surprised you managed to draw the conclusion that it was a "party political broadcast"- if you read the post then there was NOTHING political about it. At all. Unlike the posts referring to McDoom etc, which I would suggest reveals a political bias in the views being expressed. It will not surprise you if I say I think your views are extraordinary and seem to be advocating an isolationist, right-wing agenda that soes not reflect current Conservative policy and would not be out of place in some of the parties further to the right. I find that interesting.

I am also surprised that you think a £178bn deficit can and should be reduced through spending cuts alone. That would mean a reduction in total Government expenditure by around a third so a reduction in "traffic schemes", withdrawing from the EU and the like can't deliver that I'm afraid, particularly if at the same time you seem to be advocating increases in defence spending. Cut in the public scetor would also place upward pressures on Government spending through benefits for those made unemployed and will reduce demand for the private sector, both from  increased unemployment and Government spending on services delivered by businesses.

You also suggest withdrawing from the EU, which is responsible for 60% of the UK's trade so an isolationist policy is unlikely to help the private sector or economic growth. You also want to cut immigration which would leave a  gap in the workforce and cause major problem for services such as the NHS who employ a number of excellent doctors and nurses from abroad. You don't say how much you want to reduce immigration or your reasoned and quantatitive analysis of the claims immigration has a net possitive effect on the UK economy.

You want a simpler and a fairer tax system. Most people accept much of the complexity has been driven by a desire to make the tax system fairer so it would be good to know what your ideas are to achieve both those objectives while also ensuring tax receipts do not plummet and the tax base is maintained. 

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By User deleted
06th Mar 2010 13:22

Wales and the EU

You might also be interested to know that Wales does rather well from the EU. Here are some facts and statistics on Wales and the EU so you might want to consider the impact of the isolationist view you advocate.  http://wales.gov.uk/topics/international/europe/walesandeu/?lang=en

Every year Wales benefits from millions of pounds of European Funding to assist economic development:

Wales has been awarded £1, 571 million of EU funds for the Programme period 2000 to 2006 to promote sustainable economic development, enabling us to transform the economy of Wales through the funding of thousands of innovative and sustainable projects.£1, 313 million of these funds is Objective 1 grant for West Wales and the Valleys to address regional disparities.At the end of 2005, the European Structural Fund Programmes were 94% committed, with £1.46 billion European grant committed to 2, 655 projects, representing some £3.5 billion of total project investment in Wales.Recent studies have indicated that up to 40, 500 net additional jobs will have been created by the end of the programme period and up to 85, 000 unemployed or economically inactive people will have been helped into work or trainingEuropean funding goes to a variety of projects and organisations, for example:A new National Waterfront Museum in Swansea is receiving £3.7 million.Stena Line Ports Ltd has benefited from £3.5 million to help develop a new berth at Holyhead, Anglesey and secure North Wales’ future as a place for tourism and business opportunities.The Welsh Development Agency is receiving £8.3 million to establish an
OPTIC Technium, an opto electronics technology and incubation centre to help sustain and grow the development of the sector in north west Wales.  This is one in a network of Techniums that Objective One is assisting throughout Wales.The University of Wales College Newport is receiving £420, 154 to provide progression opportunities into Higher Education for learners in disadvantaged communities in Newport.Rhondda Cynon Taff County Borough Council and Welsh Assembly Government strategic partnership project, Genesis, is receiving £12.8 million to offer free childcare provision to parents and carers accessing learning and training opportunities in the area..Rural and market towns in Carmarthenshire are benefiting from a town improvement and rural conversion grant package of £950, 000EU Membership means freedom of movement across 25 countries:In 2003, Welsh residents made 2 million trips to EU countries.Low-cost airlines exist due to EU rules on single market and competition.  Wales has benefited from RyanAir and BMIBaby operating from Cardiff International AirportWelsh holiday-makers are covered for emergency hospital treatment anywhere in the EU by the E111 schemeEU regulations are imposing common higher standards, reducing pollution and producing cleaner air, rivers and purer water:EU funding has contributed to the reclamation of sites such as Brynlliw Tip near Swansea and flood alleviation schemes across Wales.In 2005 there are a record 41 Blue Flag beaches across Wales, after they met the strict European Standards for water quality, litter collection and public amenities.  EU education, training and youth programmes provide the opportunity to work, train or study in another country, for example:The University of Wales Swansea has participated in the Erasmus exchange programme since its inception. They presently have exchange agreements in place with 86 institutions in 12 countries and 75 students will participate in the programme during 2004-05.

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By cymraeg_draig
06th Mar 2010 15:21

Insulting innuendos

........ right-wing agenda that soes not reflect current Conservative policy and would not be out of place in some of the parties further to the right. I find that interesting.

 

Posted by Anonymous on Sat, 06/03/2010 - 13:11

 

This is clearly an attempt to inflame by making insulting and unfounded innuendos.  I will therefore not be addressing your left wing views, particularly as you choose to post anonymously.

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By User deleted
06th Mar 2010 18:09

Not insulting or inflamatory at all

That really wasn't the intention and I'm sorry you feel that way. However, it is actually a statement of fact because the policies you advocate (withdrawal from the EU, curbs on immigration, putting police on the beat, lower taxes, simpler tax and pensions, increasing spending on defence by 40%) are contained within the UKIP manifesto, which is generally considered to be to the right of the Conservative party. You can see for yourself on the UKIP website http://www.ukip.org/media/pdf/UKIPbooklet2009.pdf 

If you find the facts offensive then I can only apologise. It is interesting to me however that your views tally with those of UKIP and are therefore generally further to the right than those of any party likely to be elected.

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By cymraeg_draig
06th Mar 2010 22:39

What political party ?

The policies I advocate have nothing to do with any particular political party. 

What the nation needs is an end to the pseudo-socialist nightmare created by Brown & Co, and a return to strong leadership which reduces the role of the state. We need to dismantle the nanny state and get rid of the control freaks who want to control our every movement. 

And to do that I would adopt some policies from the Tories, some from UKIP, some from the Liberals, and even certain policies from the BNP.  No political party has the complete answer, but Labour clearly has none.  By taking the best parts of all the other parties policies, maybe, just maybe, our once great country can be rescued before it is destroyed forever. 

I am not too proud to say openly that I love my country and it needs rescuing.  Rescuing from corrupt self serving politicians, petty beurocrats, politically correct muppets, and assorted eco-loons.   

As a nation we cannot sustain the vast numbers of immigrants, we cannot sustain a health service that is abused by those who have never contributed, we cannot sustain a benefits system that hands out money to people who have never paid into it, and we cannot subsidise farmers in Greece and Bulgaria and pay for vast armies of eurocrats. 

The EU must be changed back to what it was initially intended to be - a "common market" - nothing more. 

Our country must be handed back to its people - and government must serve the people, not as we have now where the people serve government.  

In my view, if drastic and radical action is not taken, and very soon, Britain will be lost forever, and will simply become a meaningless little island off the coast the the United States of Europe, and Brown will go down in history as the man who sold out a nation and destroyed a country - the ultimate traitor.

 

 

 

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By johnjenkins
08th Mar 2010 09:56

Weekend Jaunt

I go away for a weekend and look what happens and I've missed all the fun.

Welsh Daragon, as always is spot on. Sorry Anonymouse but this country cannot be run by economists. It needs strong leadership. Thats why Maggie and Tony lasted as long as they did. There is no leader of any party at the moment that commands that status.

Anonymouse, you say that we should not focus on politics but rather on the problem of the deficit. I certainly agree, but we all know that the answer is going to be politically motivated. You also say that the complexities of the tax system has come about because of the need for it to be fairer. You must be joking. The tax system and associated penalty regime is geared to raise as much money as possible regardless of fairness. Therein lies the problem. As for nobody liking taxes, isn't that human nature????????? What people don't like is having the micky taken out of them by a Government who squander every penny they get.

It is time we had a Government that worked for us and not their Party. So, I'm all for a hung parliament, perhaps someone with a bit of common sense might emerge.

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By cymraeg_draig
08th Mar 2010 16:00

Hung parliament

It is time we had a Government that worked for us and not their Party. So, I'm all for a hung parliament, perhaps someone with a bit of common sense might emerge.

 

Posted by johnjenkins on Mon, 08/03/2010 - 09:56

 

"Hung" as in rope and lamp post ?

Now that might be justice.

 

 

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By johnjenkins
08th Mar 2010 17:08

No change

Seems like there's no change since Guy Fawkes day - only method!!!!!!!!!!!

But then wouldn't the council want some sort of rental for the hire of a lamp post and of course the traffic warden would want some fine if the lamp post was on a double yellow. All in all could be a bit expensive albeit the hire would be tax deductable unless, of course it would be deemed "tax avoidance" and you would become a "wrong doer"

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By cymraeg_draig
08th Mar 2010 18:04

But worth every penny ......................

.

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By mikewhit
08th Mar 2010 18:35

Gross

NI increase condemned as 'tax on jobs'

Why a 'tax on jobs' ? It's just a tax.

If you grossed the employee's pay up to the full amount expended by the employer: net pay + PAYE + er's NI + ee's NI, then told the employee that their gross salary had gone up but so had the 'tax' then everyone would get the same amount, so why the fuss ?

It's just that the "ee" never gets to see the "er" NI.

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