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Social care tax will reduce take home pay and hold back wage growth

    In response to the Government’s announcement today on social care funding, the Director of the Centre for Policy Studies, Robert Colvile, said: 

    ‘The pressure that Covid has imposed on the NHS is clear, as is the need for extra funding for social care – which must, as we have consistently argued, be accompanied by comprehensive reform.

    ‘The Government should be praised for having the courage to grasp the nettle on this issue. There are no perfect options here – but that said, it is disappointing that ministers have chosen to stick with the Dilnot model, which entrenches housing inequalities, rather than the state pension model proposed by the CPS and Damian Green MP.

    'The dividend tax hike, coming on top of a huge planned increase in corporation tax, will be a blow to business, the self-employed, and Britain's tax competitiveness.

    ‘The National Insurance rise is also a bitter pill to swallow. We know social care is in dire need of reform, but raising employee NICs will immediately reduce take-home pay, at a time when pandemic-related inflation is just starting to take off. Increasing employer NICs will hit workers too, by holding back wage growth.’

    Date added: Tuesday 7th September 2021