Theresa May has defended the National Insurance increase for self-employed workers – saying it will make the system “fair”.
The Budget announcement prompted criticism that the government had broken a manifesto pledge on tax rises.
The change will see millions of self-employed workers pay an average of £240 a year more.
But Mrs May said the poorest workers would pay less and the change would “close the gap in contributions”.
Think tank backs NI rise
Amid criticism from some Conservative MPs, the prime minister was asked about the policy at a press conference following an EU summit.
“We did make some difficult decisions in the Budget yesterday,” she said, adding that those decisions had allowed them to fund technical education and new free schools, as well as social care and the long-term productivity of the economy.
She said the decision “was taken in the context of a rapidly changing labour market in which the number of people in self employment is rising rapidly”.
The shift towards self employment was “eroding the tax base”, she argued.
“Is it fair? I think it is fair to close the gap in contributions between two people doing the same work and using the same public services to make the same contribution to wider society.”
‘We should apologise’
She said, with other NI changes, “this is a change that leaves lower paid self-employed workers better off” and .
Ministers say those earning £16,250 or less will see their NI contributions fall.
Among Conservative MPs criticising the measure was Guto Bebb, a government whip and minister in the Wales Office.
He told BBC Radio Cymru: “I believe we should apologise. I will apologise to every voter in Wales that read the Conservative manifesto in the 2015 election.”
The Conservatives’ last general election manifesto explicitly ruled out rises in National Insurance, VAT and income tax during the lifetime of the current Parliament.
During the campaign, then Prime Minister David Cameron continually repeated the commitment in public and contrasted it with the “jobs tax” which he said people could expect under Labour.
In the wake of Mr Hammond’s Budget announcement, ministers argued that legislation enshrining the manifesto commitment in law – approved by Parliament in 2015 – only referred to National Insurance contributions paid directly by employers and their employees.
Wednesday’s changes would see the 9% rate of Class 4 National Insurance contributions currently paid by those self-employed people earning between £8,060 and £43,000 go up to 10% in April 2018 and to 11% in April 2019.
Labour accused the government of “breaking their promises” and “clobbering” the self-employed while the Lib Dems and UKIP also criticised the move.
9 March 2017 | 8:09 pm
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