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Is the national insurance increase a tax on jobs?

As the debate regarding the Labour government's proposed 1% increase in national insurance, and the conservative party's partial reduction, rages on there is a growing feeling that the increase is actually a tax on jobs. Indeed the Conservative party has today issued a number of additional costs which UK taxpayers will incur if the national insurance rise was to go through. So how would the increase affect the rest of the UK and the UK economy?

While many of us automatically assume that it will only be the private sector which is impacted by the national insurance rise, it is worth remembering that with over 50% of the UK workforce employed by the state there will be a significant impact on cost in the public sector. Indeed the Conservative party figures suggest that billions upon billions of pounds in additional national insurance payments will be made by state employees and companies trading within the public sector.

So in reality an increase of 1% in the national insurance rate will have a detrimental impact upon the budget deficit which is set to remain deep in trouble for many years to come. It would appear there will be many hidden additional costs if the UK government does push through a 1% increase in the national insurance rate.

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