Boris Johnson stated that it will raise £12 billion per year to address the health backlog created by the Covid pandemic as well as to improve social care. He acknowledged that the tax violated a manifesto promise, but claimed that the "global epidemic" was "not in anyone's manifesto." Leaders in social care also worried that the funds would be "nowhere near enough" to meet present issues.
From April 2022, the tax will be implemented as a 1.25 % increase in National Insurance, paid by both employers and employees, before transitioning to a separate tax on earned income in 2023, which is calculated in the same way as National Insurance (this information will continue to appear on the employee’s payslip).
This will be paid by all working individuals, including older workers, and will be "legally ring-fenced" to go only toward health and social care costs, according to the government.
Share dividend income, which is generated by persons who hold stock in a company, will also be taxed at a higher rate of 1.25 %.
According to the Institute for Fiscal Studies, the latest tax rises totalled £14 billion. When this is combined with those proposed in the March Budget, the year 2022 will witness one of the largest tax increases in 4 decades.
The UK-wide tax would primarily fund health and social care in England, although Scotland, Wales, and Northern Ireland will each receive £2.2 billion to spend on their own services.
The SNP has also criticised the new tax rise claiming that it will "unfairly penalise Scottish households, leaving the poorest in society subsidising the wealthiest".
On Wednesday, MPs in the Commons will vote on the revised ideas. Mr Johnson said that the levy would raise £12 billion each year, with the majority of the money going toward catching up on the NHS backlog caused by Covid, such as expanding hospital capacity and making room for nine million more visits, scans, and procedures.
With £5.4 billion accumulated over the three years, a portion of it will be used to make changes to the social care system, with further money promised after that.
From October 2023, a lifetime cap of £86,000 on care expenditures will be implemented in England.
Those who possess assets worth less than £20,000 will have their care costs covered by the state, while those with assets worth between £20,000 and £100,000, will have their care costs subsidised instead.
"Everyone will contribute according to their means," Mr Johnson insisted, adding, "You can't address the Covid backlogs without giving the NHS the money it needs." It's impossible to improve the NHS without also fixing social care. You can't solve social care without removing the fear of losing everything to pay for it, and health and social care can't be fixed without long-term reform."
On the other hand, Labour’s current party leader, Sir Kier Starmer said that the new tax violated the Conservatives' election promise not to raise National Insurance, income tax, or VAT. Additionally, he also stated that the increase will target young people, supermarket workers, and nurses, rather than targeting those with the "broadest shoulders," who would be required to pay more.
Mr Johnson said that no Conservative government wants to raise taxes, but defended the action as "the correct, rational, and fair approach" in the wake of the pandemic, which cost the government £407 billion to combat.
In a later conference, Mr Johnson claimed he didn't want to raise taxes any higher, but he didn't pledge there would be any more increases until the next election.
Meanwhile, the government has announced that the so-called "triple lock" on pensions will be suspended for a year, citing worries that a large post-pandemic rise in average earnings would have resulted in pensions rising by 8%.
Even though the figures are staggering, health and care executives are unhappy.
The Covid pandemic has taken a major toll on the NHS, necessitating a complete revamp of how services are delivered and resulting in a mounting backlog of care.
Even with this money, the healthcare system will take years to catch up.
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