Theresa May Supports Philip Hammond’s Tax Hike


REUTERS/Stefan Wermuth

LONDON (Reuters) – Prime Minister Theresa May defended her finance minister on Thursday against criticism for raising a tax on some self-employed workers in his budget, saying the measure was necessary and “fair”.

Members of her governing Conservative Party and many British newspapers accused finance minister Philip Hammond of breaking a party pledge ahead of the 2015 national election not to increase national insurance contributions.

But in Brussels at her last EU summit before triggering formal divorce talks with the bloc, May said the measure would benefit lower-paid workers while providing revenue to boost skills, schools and social care.

Britain’s Prime Minister Theresa May attends a news conference during the EU Summit in Brussels, Belgium, March 9, 2017. REUTERS/Dylan Martinez

“We did make some difficult decisions in the budget yesterday, but those decisions allowed us to fund an ambitious new approach to technical education … and meet the growing demand for social care as well as investing in the long-term productivity of the economy,” she told a news conference.

Earlier, Hammond, who became finance minister in 2016 shortly after Britons voted to leave the European Union, defended his decision as a first step in addressing an unfair difference in tax treatment between ordinary employees and the growing number of self-employed workers.

Paying national insurance contributions allows workers to qualify for certain benefits, including a state pension. Employed workers pay higher contributions than the self-employed.

In a round of media interviews, Hammond faced tough questions about why he appeared to have reneged on the election promise.

“No Conservative likes to increase taxes, national insurance, anything else,” he told Sky News.

“But … our job is to do what needs to be done to get Britain match-fit for its future.”

“WRONG DIRECTION”

Some Conservative lawmakers urged Hammond to drop the changes or delay them until a broader government-ordered review into employment practices has been completed.

“This is going in the wrong direction,” Conservative lawmaker Anne-Marie Trevelyan told BBC Radio. “We need to put this on hold so we can have a proper review and think in a holistic way.”

The change was part of Hammond’s first full budget statement on Wednesday, which comes as Prime Minister Theresa May prepares to trigger the process of leaving the European Union this month.

A spokesman for May, who has a slim majority in parliament, declined to say whether the government would consider scrapping the change if faced with a rebellion among its lawmakers.

“This has been set out to address an area of unfairness and it does that,” he told reporters.

Hammond said 60 percent of self-employed people – who account for 15 percent of those in work – would see a fall in their national insurance contributions under his changes, while the higher-earning 40 percent would pay more.

The budget also included a cut in the tax-free allowance for dividends, which will largely affect the self-employed.

Paul Johnson, director of The Institute for Fiscal Studies think-tank, described Hammond’s changes as “sensible”.

“If politicians continue to make silly manifesto pledges about not changing taxes, and the rest of us resist sensible changes such as this, we will end up with the tax system we deserve – inefficient, inequitable, complex and increasingly unable to raise revenue in the face of a changing economy,” he said.

log in

Captcha!

reset password

Back to
log in