Says new TPA research
New TaxPayersโ Alliance policy paper says that we shouldnโt give hand-outs to students and graduates,ย we should helpย allย young peopleย by taking less of their money.
The chancellor is reported to be examining ways to tackle โintergenerational unfairnessโ at next monthโs budget – cutting their taxes is the best way to do that.
Labour has called for an abolition of tuition fees but doing so – or making student loan repayment terms even more generous – would be unfair to those who donโt go to university.
Rather than (yet again)ย cutting pension tax relief for older workers to pay for a tax cut for the young,ย the governmentย should instead cancel its proposed changes to student loan repayments, which only benefit fewer than half of young people.
The TaxPayersโ Alliance is today calling on the government toย give all young people a break byย scrapping their employeesโ national insurance contributions.ย The campaign group has published a policy paper, Young people and national insurance, outlining three options for cutting national insurance contributions:
- Raise the starting age on employee national insurance from 16 to 26 instead of the governmentโs plan to raise the student loan repayment threshold from ยฃ21,000 to ยฃ25,000. Nobody aged 25 or under would pay any employee national insurance.ย The governmentโs plan raises spending by ยฃ2.3 billion, ours cuts tax by ยฃ2.6 billion
- Raise the starting age on employee national insurance from 16 to 30, cut the student loan repayment threshold from ยฃ21,000 to ยฃ12,500 and raise the repayment rate from 9 to 15 per cent. Most graduates would repay their loans and no under 30s would pay any employee national insurance. Do this instead of the governmentโs plan to raise the student loan repayment threshold from ยฃ21,000 to ยฃ25,000.ย The governmentโs plan raises spending by ยฃ2.3 billion, ours cuts spending by ยฃ4.4 billion and cuts tax by ยฃ7.2 billion
- Raise the starting age on employee national insurance from 16 to 32 instead of Labourโs plan to abolish tuition fees. No taxpayer under 32 would pay any employee national insurance.ย Labourโs plan raises spending by around ยฃ9.5 billion, ours cuts tax by ยฃ10.2 billion
The striking swing in support among younger people towards Labour at the election in June was partly due to their policy platform of abolishing tuition fees. It was also a reaction to Conservative policy since 2010, particularly on tuition fees, rent controls and Brexit (support for leaving the EU is strongly correlated with age). Since the election, the government is reported to be seeking ways to help young people struggling with the cost of living.
Both parties have rightly identified that intergenerational unfairness is a real issue that needs to be addressed.ย But it should be corrected in the right way – by cutting taxes and leaving more money in the pockets of those who earned it.
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