Chancellor Jeremy Hunt has outlined his wish to abolish “unfair” national insurance tax but admitted that it “won’t happen any time soon”.
The chancellor spent around £10bn on the 2p cut to national insurance in his spring budget and has left the door open for more pre-election giveaways as the Tory party trails behind in polls.
Hunt said he wants to “end the unfairness” of the system but that eliminating contributions altogether would be a “huge thing to do”.
Read more: What the budget means for you
Speaking to Sky News, Hunt said: “We said we want to end that unfairness over time, it’s something we will only do when it’s possible to bring down taxes without increasing borrowing while also prioritising public services.
“If we are going to succeed as a country, we need to make work pay.”
Hunt suggested the government could potentially “merge” national insurance and income tax.
Read more: What has been announced in the spring budget?
However, talking to Times Radio, he admitted that it would a difficult task.
“That’s a huge job… I don’t think it’s realistic to say that’s going to happen any time soon,” he said.
Income tax raised around £251bn in 2022-23, while national insurance brought in around £177bn, according to the Office for Budget Responsibility.
Hunt also signalled that he could look to unfreeze tax thresholds in the future.
He told Times Radio: “Well, let’s look at what is going to happen next year to someone on the average income which is about £35,000. The freezing of income tax allowances means that their taxes are going to be £235 higher than they would have been if the thresholds had been increased with inflation. But the national insurance cuts are going to mean that they pay about £900 less.
“The bigger point you are making, yes, freezing the thresholds is one of the ways in which taxes have gone up in order to pay for the jobs that we protected during COVID, the help we have given families paying their electricity bills over last weekend, all those other very important things.
“And I am not pretending that I have brought all those taxes down in one go. We can’t afford to do that, it wouldn’t be responsible to do that.
“But do I want to carry on bringing them down as I did yesterday, as I did in the autumn statement? Yes, I do and I think we have shown the country at two events in a row, stick with the plan, we can bring down taxes in a way that is going to help grow the economy, put money in people’s pockets and provide more money for our public services.”
Read more: What a 2p national insurance cut means for your finances
The tax thresholds have been frozen since 2011 and should remain unchanged until 2028.
The media round included the BBC Radio 4’s Today programme, where the chancellor clashed with the presenter.
BBC host Amol Rajan told the chancellor that he had been called “the fiscal drag queen of UK politics” because of his policies.
“Has your Budget come close to meeting the scale of the challenges this country faces?”@AmolRajan lists a stagnant economy, creaking public services and a reliance on foreign labour.
Jeremy Hunt says he ‘believes it has’ and calls the characterisation ‘unworthy of the BBC’.
— BBC Radio 4 Today (@BBCr4today) March 7, 2024
Fiscal drag is when people end up paying more tax than before, because tax thresholds do not adjust in line with rising salaries and inflation.
“I want to make a start on bringing down taxes. I’ve never said for one moment that I can bring them right down all in one go,” the chancellor told Today programme.
“I don’t think I’ve ever been called a drag queen before, by the way.”
The next five years could be the hardest for a chancellor since the Second World War, the IFS warned.
Watch: Hunt says national insurance abolition will not happen ‘any time soon’
Download the Yahoo Finance app, available for Apple and Android.
