Former chancellor Nigel Lawson, who PM cites as inspiration, warned merging NICs with income tax would ‘create many losers’
, who has said it is his ambition to scrap the tax on workers. He has called Lawson a “transformational chancellor and an inspiration to me and many others”, and said one of the first things he did as chancellor in Boris Johnson’s government was to hang a portrait of Lawson above his desk.
The type-written memo, marked secret, was sent to Thatcher two months before Lawson’s third budget and was enclosed alongside a green paper set to be published that day. The document was found in theIn the brief, Lawson says he has considered “the scope for integrating income tax and national insurance contributions”, but concludes: “I see little practical merit in moving in this direction; it would destroy the contributory principle and create many losers, especially among the elderly.
“Applying the new combined charge to all income would result in significant shifts in the tax burden between different sections of the community,” it says. “Elderly taxpayers and other pensioners would probably be the largest group to suffer disadvantage.” He says the shift “would be hard to justify on either economic or social grounds”.
In the March budget, Jeremy Hunt announced his “long-term ambition” to abolish NICs, saying he was looking at the option to “merge income tax and national insurance”.cited House of Commons library research that suggested replacing lost NICs revenue would cost pensioners an extra £944 a year on their income above the current £12,570 personal allowance.
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