RAPID RESPONSES
Brain drain fears
I read Friday’s article by Emma Boon on the merger of income tax and national insurance contributions (NIC) with interest, as a Chartered Tax Adviser and member of the Association of Taxation Technicians.
I fear the global nature of social security contributions and its underlying contributory principle (contributions made by an individual directly affect their entitlement to state benefits) means merging tax and NIC would diminish the UK’s international competitiveness. Take, for example, a US national not wishing to forfeit Medicare entitlement. Currently he or she will pay UK income tax up to 50 per cent, US FICA contributions but no UK NIC. Merging income tax and NIC in the UK unilaterally will result in this individual paying UK income tax up to 62 per cent and US FICA contributions. Merging income tax and NIC will result in decreased net pay for foreign workers in the
UK and could lead to a brain drain greater than that experienced through the increase in income tax to 50 per cent.
Name withheld