THE Tories will today pledge to scrap part of Labour’s planned increase in National Insurance, City A.M. understands.
In a move that will put the “tax on jobs” at the heart of the election campaign, Shadow Chancellor George Osborne will lay out a fully-funded plan to stave off the rise in employer and employee contributions for the majority of workers.
With the tax hike set to raise more than £6bn-a-year when it comes into force in April 2011, Osborne has decided that he cannot scrap it entirely in his first emergency budget, which will be held this summer should the Tories win the election.
But he believes seven out of ten employees will be better off under his plans, which are designed to benefit those on middle incomes. It is likely that those paying higher rates of tax will still be affected by the hike.
The shadow chancellor has ruled out another tax rise to pay for the move, suggesting he will announce some kind of reduction in spending when he unveils the proposals today.
Business leaders and economists have been aghast at Labour plans for a one per cent increase in national insurance contributions for both employees and employers, arguing that it will stop the recovery in its tracks by limiting new job creation.