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Politics / Carmichael urges caution on Conservatives’ proposal to scrap National Insurance contributions

Isles MP Alistair Carmichael.

NORTHERN Isles MP Alistair Carmichael has spoken up against the Conservative government plans to abolish National Insurance contributions.

Last week, during his budget speech, chancellor Jeremy Hunt revealed the ambition of the Conservative party to abolish National Insurance contributions (NICs) over time.

Prime minister Rishi Sunak said it was his “long-term ambition” to scrap the “double taxation in work” by income tax and National Insurance and “end that unfairness”.

In response to this, Labour described the Conservative plan as an “unfunded £46 billion promise” that would nonetheless need to be covered by means of other taxes.

As the issue is becoming increasingly divisive, Shetland and Orkney MP Carmichael voiced his concern about this proposal in parliament on Wednesday evening.

He said National Insurance was “identifiably different from the other taxes we pay” as “the symbol of our shared obligations – what we owe each other as a society and as communities in support throughout our lives”.

This he said becomes particularly pressing in relation to pensions and other benefits. Speaking in the house, Carmichael said: “It is a substantial commitment to make – £46 billion – and we do not yet know where that money would come from.

Although National Insurance functionally works more or less like any other tax, spent by the government in whichever way seems fit, from health to civil service salaries and defence, it differs in fact “as a matter of intent and purpose”.

“The point of national insurance is that we pool and share resources geographically and generationally. We pay our stamp on each payslip, trusting that, when the time comes for us to retire, someone else will continue to pay taxes that will fund our pensions.”

Stressing this point, he continued: “We have obligations to those we know, to those we do not know, to generations that are older than us, and to those who are yet to be born.

“That is the system in which the national insurance contribution has a demonstrably significant and different impact than other taxes. It is part of the tapestry of government and public life in this country.”

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