DM Monitoring
LONDON: UK Prime Minister Boris Johnson announced plans to hike taxes on Tuesday to fund health care and reforms to the country’s social care system.
From April, Johnson’s government wants to introduce a new 1.25% health and social care levy on earned income across the UK Tax rates on shareholder dividends will increase by the same amount. It will begin as an increase on the existing National Insurance rate (a current tax on earnings) and become a separate tax on earned income in 2023.
The increased taxes will raise almost £36 billion over the next three years, according to the government, with money from the levy going directly to Britain’s health and social care systems. The plans require approval from Parliament before they can be enshrined into law.
Speaking to lawmakers in the House of Commons on Tuesday, Johnson said it would be “wrong for me to say that we can pay for this pandemic without taking the difficult but responsible decisions about how we finance it.”
The prime minister said that because the new tax rate would be a permanent additional investment in health and social care, it would be “irresponsible” to meet the costs through more borrowing.
“Some will ask why we don’t increase income tax or capital gains tax instead. Income tax isn’t paid by businesses, so the whole burden would fall on individuals, roughly doubling the amount that the basic tax payer could expect to pay. And the total revenue from capital gains tax amounts to less than £9 billion this year,” he told politicians.
“Instead, our new levy will share the cost between individuals and businesses, and everyone will contribute according to their means.”
