UK Treasury chief backs down on tax plans after outrage

AP News
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Posted: Mar 15, 2017 8:57 AM
UK Treasury chief backs down on tax plans after outrage

LONDON (AP) — Britain scrapped a plan for higher taxes on self-employed workers Wednesday after the proposal touched off outrage from the nation's growing legion of self-employed workers.

Treasury chief Philip Hammond announced an increase in National Insurance contributions for the self-employed in his budget last week, arguing the measure was needed to level the playing field for those employed by companies and those who work for themselves. The public was outraged, as the Conservatives had promised no such increases during the 2015 election campaign.

Just moments after the U-turn was announced, Prime Minister Theresa May faced a loud and boisterous House of Commons. Amid howls, she insisted that while she still wanted equity in taxation, it wasn't going to happen now.

"We will bring forward further proposals but we will not bring forward increases in (national insurance) later in this Parliament," she said.

A review into the matter will go forward, and carried out alongside a review on employment rights to be carried out by Matthew Taylor, a former adviser to Tony Blair.

"As a number of my parliamentary colleagues have been pointing out in recent days, the trend towards greater self-employment does create a structural issue in the tax base on which we will have to act," she said. "We want to ensure we maintain fairness in the tax system."

Self-employed workers currently pay National Insurance taxes equal to 9 percent of earnings, 3 percentage points less than traditional employees.

The inequity was hurting the nation's coffers as the number of self-employed people grows. The Office of National Statistics reported Wednesday that a record 4.8 million people are now self-employed, up by 148,000 over the past year, representing 15.1 percent of the total workforce.

Such numbers are important as the government tries to shore up the budget ahead of the uncertainty of leaving the European Union.