National Insurance & Person Tax

Surely the government is making a mistake by increasing National Insurance contributions. As energy and other raw materials become scarce and therefore expensive it is going to be increasingly important to make it cheaper to employ people (especially in the developed world). A healthy economy has a high level of employment, with just enough slack (unemployment) to allow for some flexibility.

Since public services employ a very significant percentage of the population it makes little sense to take with one hand and give straight back with the other (in increased employers contributions).

I would reduce National Insurance with the aim of eliminating it altogether. NI was designed as a tax that everyone pays at a similar level and everyone takes a pension, health care and employment cover. The reasons for the way NI works are long since lost in the mists of time and are not well understood. High earns may complain about the way Income Tax increases on higher earnings but you don't often hear that NI actually works the other way around. If you model the total personal tax it comes out at about 25% across the board.

Maybe the first step would be to bring it down to 10% but eventually I would like to simplify the personal tax regime by having single direct tax based on Income;

First £8,000 tax free - this needs to be sufficiently higher than the level of benefits available to the unemployed to maintain an incentive to work
Further £20,000 at 25% - medium level earners are significantly better off
All additional income at 50% - those earning over £100K might be penalised slightly

Alternatively it would be interesting to model what happens if a flat tax rate of, say, 30% would work. There is an argument that capturing 30% from everyone is better than taking 50% for the few rich people not employing a good accountant.

It would also be necessary to recover the tax income handed back to employers by reducing or eliminating their NI contributions. We want businesses to employ people, indeed it needs to be efficient to employ a person instead of purchasing an energy intensive machine. Additional Corporation Tax might penalise good businesses but we could take a tax off energy intensive businesses in the form of a steep Carbon Tax.

Population & Housing

Having seen David Attenborough present the Horizon special the other night it seem obvious that the UK government needs to set a target population for the country to work towards. Somewhere between 50 - 60 million seems about right. Achieving the target might take a generation but policy should be bent towards the goal starting with a look at tax and benefits that relate to children other than the first.

Further efforts need to be made toward addressing our high levels of teenage pregnancy, indeed education towards making it the norm for couples to wait until at least the age of 25 would almost certainly lead to better parenting.

The overall population target should be adopted at regional level by adopting the current policy towards new housing development. Instead of expanding the housing stock a mechanism should be developed to promote the building of new energy efficient houses while simultaneously redeveloping older houses where it is not economical to bring them up to modern building standards. Maybe there is an opportunity to resolve the inequity of Stamp Duty at the same time?

Q: how to make it economically desirable to demolish old energy-inefficient houses?