George Osborne is considering proposals to introduce a new employment tax

George Osborne is considering proposals to introduce a new employment tax

Workers could be forced to pay an extra tax in order to be eligible for unemployment support if they lose their job, under new suggestions introduced recently.

Chancellor George Osborne is currently considering plans to make workers pay at least £5 a week into a personal “welfare account” to get higher benefits if they lose their job.

By higher benefits – it means, the benefits currently being received.

In a report published today, the right-wing Policy Exchange think-tank proposes a shake-up of the welfare system to link the amount of this new tax workers pay to how much benefits they will get if they lose their job. The report is being studied by the Downing Street Policy Unit and such reforms could be signalled in the Conservatives’ general election manifesto.

Under the initiative, a “compulsory collective insurance scheme” will be introduced into which everyone working more than 20 hours a week would pay £5 a week. It would be run by private-sector providers such as insurers and fund managers.
Steve Hughes, the report’s author and a former Bank of England analyst, said: “Successive governments have tried and failed to improve the system from the top down. This has created a culture of something for nothing, with people becoming reliant on the state.”

However such a system would be totally illegal. Why? Two words: National Insurance. In the UK, National Insurance pays for the NHS – which the Tories are trying to scrap by privatisation. It also pays the state pension, sickness and disability allowances, in addition to unemployment benefit.

Therefore, if this new tax is introduced, Brits would essentially be forced into paying for the same thing twice.

The report suggests that one way of getting around the problem is to make nominal reductions to National Insurance contributions.

Of course, in practice, the likelihood is, the reductions would be less than the amount that workers would be expected to pay into the new scheme.

The payments from workers would raise £8bn a year, claim the government and £2bn of which would go into an unemployment insurance scheme – which of course is already paid for via National Insurance.

This new initiative which is being proposed, would also encourage higher earners to pay up to an extra £100 a week, and could use their fund to retrain if they lost their job or during other emergencies such as ill-health. In other words, they would not be in receipt of any money, but the funds paid in would be limited to initiatives approved by the government.

If introduced, this unlawful scheme would effectively negate the need to pay National Insurance – but would still force Brits to pay twice anyway.

This new report comes after it was announced that MPs will get a ten per cent pay rise.

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