Plans for National Insurance hike a ‘regressive jobs tax’ – Plaid Cymru

Plaid Cymru has described the UK Government’s predicted increase in employer National Insurance contributions as a ‘regressive jobs tax’.

Plaid Cymru’s Business and Trade spokesperson, Llinos Medi also urged the Chancellor to use the Budget for ‘honest tax reforms’ instead of ‘finding clever loopholes’ to avoid breaking manifesto pledges.

Rachel Reeves is expected to announce plans to increase employers’ NI contributions in Wednesday’s budget by at least one percent.

Labour’s general election manifesto pledged not to increase taxes on working people – explicitly ruling out a rise in VAT, national insurance and income tax.

‘Working people’

Ministers have been facing repeated questions over the Government’s definition of “working people”, in the run up to the budget and have come under pressure to spell out precisely who would and would not fall under this definition, given the extent of expected tax rises due to be announced this week.

Ms Medi said that the difficulties faced by the Labour government a Westminster exist, “because Labour decided to refuse to engage honestly with the public” during the election campaign.

Highlighting the fact that in 2023, 99.3% of total enterprises active in Wales were small/medium sized enterprises (SMEs), the Ynys Mon MP said that “supporting them is crucial if we want our local economies to thrive.”

‘Lifeblood’

“Small businesses are the lifeblood of the Welsh economy. The vast majority of our businesses are SMEs – so supporting them is crucial if we want our local economies to thrive”, she said.

“Instead, Labour’s proposed increase in employer National Insurance contributions risks imposing additional burdens on this crucial yet already struggling sector.

“Increasing employer National Insurance contributions acts as a regressive jobs tax, hitting small businesses and low to middle-income earners the hardest. By raising employer costs, it could impact wages, pensions, and job opportunities – threatening the financial security of working families, reducing retirement savings, and limiting job growth at a time when support for small businesses is critical.

“The IFS repeatedly criticised both Labour and the Tories for a conspiracy of silence over their tax plans. We are in this situation now because Labour decided to refuse to engage honestly with the public about their tax and spend plans.

“Instead of finding clever loopholes to raise taxes while dodging accusations of breaking manifesto pledges, Labour should acknowledge the need for honest tax reform and consider fairer methods.

“For example, the government could raise £24 billion a year from a 2% tax on wealth above £10 million. Plaid Cymru urges Labour to consider the real cost of their regressive proposals on the businesses that are the lifeblood of our local economies and consider a fairer approach.”