Revealed: The next bill for the over 40s: Your social care tax

 

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Without huge coverage MPs from two influential Parliamentary committees yesterday proposed a new tax system to pay for the burgeoning cost of social care.

The proposal could mean a new hike in national insurance contributions, some redistribution of money going to fund your local council, higher council, inheritance and income tax  and/or abolishing some of the existing universal pension benefits, like the heating allowance or cutting future state pension rises.

Significantly it includes making existing pensioners pay more tax particularly if they are still supplementing their pension by working.

This makes this the first serious policy proposal to deliberately tax people differently depending on their age – and exempting the millennials  at the expense of the elderly. In that it feeds into the current  and my view misconceived debate that millennials are being robbed by wealthy pensioners and the system must be changed to tax pensioners more.

The proposals may well prove to be attractive to the present government which has been trying to create an inter generational wedge between the young and old people – as a sop to the younger generation who have been burdened with huge student loan debts by government policy and can’t afford to buy a home.

No one can deny that the present system for social care is in a mess and is underfunded and it is estimated by the report  using  data from the Institute of Fiscal Studies that spending on  care needs to rise by 3.9 per cent a year just to keep the current severely means tested system which means many cannot get help. It will cost billions more if personal care like the NHS became free at the point of use.

At the moment many people are already paying for care through  local council tax. When people ask where is all the council tax  money  is going – anything from 25 pc to 57pc  is going on social care for the young and old. The average of 37.8 pc according to the report.

The government is also transferring a big tranche of business tax revenue from Whitehall  to the councils and at the same time abolishing grants – but not according to the MPs  earmarking any of this money for social care.

The MPs have done a lot of groundwork – suggesting an independent body should supervise the new earmarked tax-  and have used a citizens assembly to advise them of how they could do it-. The report can be read in full here.

MPs need to tread very carefully over their funding proposals because there is no doubt it could make matters worse for a lot of people.

For a start – and it is picked up by people they consulted – 40 year olds will probably have the expense of  large mortgages, or higher rents, the cost of bringing up children and  may find, if they have had successful careers that they are  paid enough to have to pay back student loans. So they may be even more squeezed.

They have completely ignored the plight of  3.9 million 50s women. – many being forced to work for up to six years – and would now have to pay extra insurance or tax just at the point when they find it difficult to get a highly paid job.

Also by extending national insurance contributions at a higher rate for those who still have a job after turning 65 could well hit people who have taken part time low paid jobs to make ends meet. The MPs also suggest the premium should apply to unearned income and investments held by pensioners – which amounts to a tax on pensioners savings.

The committee talks of  setting an income threshold to make sure some pensioners are exempt – but does not state what this threshold should be.

To my mind there are too many questions  that have not been answered or evaluated for the government to go ahead with this. People should remember that everybody who drew up this report was on an MPs salary of  £77,000 a year, way above many people’s incomes.

Yes we need a debate on how to fund social care – but it shouldn’t be used as part of way to drive a wedge between generations- and we shouldn’t rush into  yet another use for the National Insurance Fund when  they are so many women who have been robbed of a decent pension by the existing system.

 

 

 

 

 

13 thoughts on “Revealed: The next bill for the over 40s: Your social care tax

  1. If the Tory Party went into an election on abolishing some of the existing universal pension benefits, like the heating allowance or cutting future state pension rises, that would again be attacking their core voters, and they would lose. The Labour Party have said they would keep the triple lock for pensioners.

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  2. Im already paying for free childcare out of my tax which my generation didnt get, i also care 24/7 and dont get paid because I have a pension its expected I work for free. The lowest in Europe 5th richest country. Enough already we need a goverment who knows how to manage money not give it to the rich

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  3. What a waste of an MPs £37/hr pay (on 40hpw) discussing this crap.

    Why not tax youth for their education of 10-12 years instead of paying parents to give birth to them? Fatuous argument against elderly.
    And DISCRIMINATORY on age grounds.
    Un-do-able.

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  4. Reblogged this on jaynelinney and commented:
    As David Hencke says this suggestion was scribed by someone earning at LEAST £77.000 pa AND…
    “they completely ignored the plight of 3.9 million 50s women. – many being forced to work for up to six years – and would now have to pay extra insurance or tax just at the point when they find it difficult to get a highly paid job.”

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  5. And all that extra money will go into the coffers of the private companies who are taking over our NHS and social care system.

    Do NOT trust this government an inch. They are out to destroy everything that is (was) good about our country and the mainstream media are playing right into their hands and assisting them with their horrendous policies. The 1% leaching off the rest of us. The haves have it . The have nots will be the ones to suffer even further.

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  6. All these problems seem to arise from the fact that far to much money had been given away to immigrants. The older generation have paid their taxes and now face being robbed literally. Stop treating visitors from abroad for free if taken ill they must pay for their treatment the same for people settling in this country no benefits for at least five years until they have paid contributions into the system no free housing. Stop targeting the elderly deal with the real problems

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    • Linda I would disagree with you over this. Immigration is probably cost neutral because nearly all immigrants who come here are young, fit and work which actually increases the money going into the national insurance fund. Indeed one of the factors used to calculate the future income of the fund that pays pensions, maternity and jobseekers allowance is the level of immigration in the country – and contrary to what people think, the higher the level the more money is going in. The climate, despite the current heatwave,does not attract people coming here to retire unlike Spain or the south of France – which would take a greater toll on public services.

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  7. I just hit my 40s…..been a TI for twenty years now, they stole my papers bit over a decade ago so haven’t been able to work/ get a bank account/ home or anything since then as I don’t officially exist…so I’m curious as to how this would effect me? Also…with the euphemism of so called ‘social care’….I refuse to accept any of that, no matter what…..so the costs of violence against me and then fitting me up for defending myself, presuming I ever do would be millions more….has this been calculated into these budgets? I think not…

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