NI U-turn reveals ‘out of touch’ government
THE Chancellor’s Budget U-turn on taxes paid by the self-employed should be welcomed but it shows how out of touch the government is, says the boss of one of the world’s largest independent financial advisory organisations.
Yesterday Philip Hammond announced that the plan to hike National Insurance contributions for the self-employed would not be implemented. deVere Group CEO Nigel Green said of the decision: “This is a stunning U-turn by the Chancellor, just a week since his Budget. Whilst we welcome this climbdown, it does show just how out of touch this government is with Britain’s hardworking, already-squeezed and over-taxed entrepreneurs – the lifeblood of the UK economy.”
He continued: “Hiking taxes on the self-employed would have only served to punish ambition and undermine aspiration to get on in life.
“This grinding u-turn is now a golden opportunity for this government to go one step further and better incentivise those self-reliant individuals who take on the responsibility, risk and burden of setting up companies and creating jobs and wealth. This is perhaps more important than ever as Britain prepares to launch divorce proceedings from the EU.
“Surely, if the UK is to thrive outside the EU, it should be aiming to keep and attract more entrepreneurial self-starters.”
The Federation of Master Builders (FMB) also said the Government has made the right decision.
Brian Berry, FMB chief executive, said: “At a time when we need to do everything we can to ensure economic stability, this would have been a destabilising tax increase which would have hit large numbers of tradespeople on quite modest incomes. That would have felt very unfair and would have been in danger of undermining the entrepreneurial spirit Britain will need to rely on as we approach the economic uncertainty of Brexit. There is an important debate to be had about how we ensure an even playing field in the taxation of the self-employed and the directly employed. But we need to do that in a way that allows people to plan ahead and ensures the total package of tax and benefits is fair to the self-employed.”
The slightly startling aspect to the whole process has been that the 2015 Conservative election manifesto repeatedly pledged that “we will not raise VAT, National Insurance contributions or Income Tax”. So did the Chancellor’s office forget that was in the manifesto or was it prepared to break a manifesto promise regardless? We may never know but at least the Government made the right call eventually.
The Forum of Private Business said: “We will continue to push for simplicity, transparency and fairness.”