Monday, 6 September 2021

Regression

We are told that the government is thinking of using a hike in National Insurance, or something very close, to pay for social care.

My now distant knowledge of such things is that National Insurance is not a very progressive tax and tends to fall hardest on those in regular but poorly paid employment. So I am wondering what would be wrong with getting local authorities to collect the necessary by a hike in domestic rates, a hike which could be arranged to be a bit hikier for those sitting in big houses. That is to say progressive.

It would also have the merits of being quite difficult to evade and of involving the very same local authorities who might end up administering the upgraded social care system.

No doubt the 'Daily Mail' would wail about the awful burden imposed on people sitting in big houses rather than big bank balances. All those poor old widows stranded in huge houses in the suburbs. To which one might respond that a hike in rates would incentivise them to down-size to something more suitable and to free up their buildings and land for some more productive use.

But I doubt whether, as a country, we will have a grown-up debate about all this. We seem to prefer to pretend that it can all be done for free. Not a charge on me.

PS 1: according to Wikipedia: 'a regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases'. So the opposite of progressive, as used above.

PS 2: a few hours later: Microsoft\Independent tell me that 'Labour leader Sir Keir Starmer has ruled out his party supporting the proposed increase, arguing that it would unfairly punish young people and low earners'. But will he go on to say how he would raise the money? All part of being grown-up.

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