The top rate of income tax should be increased to 52pc to pay for workplace benefits for the self-employed, a Right-leaning think tank has said.
This extra funding should be raised alongside a complete overhaul of National Insurance (NI) to facilitate offering the self-employed Universal Credit, parental leave and sickness pay, as well as state-funded pension contributions, the Bright Blue think tank said.
Its report, published on Thursday, says employer National Insurance should be scrapped, while the rates for employees and the self-employed should be equalised at the lower rates paid by those working for themselves.
In order to make up the shortfall in National Insurance receipts, Bright Blue, whose advisory board includes Michael Gove, the former cabinet minister, proposed that all income tax rates should be increased, along with the introduction of a new 13pc band for those earning between £5,000 and £12,570 a year. The basic rate of income tax should be raised to around 31pc from 20pc, while the higher rate should near 48pc, up from its current 40pc.
Kevin Hollinrake, the chairman of the Conservative Party, said that risk-takers and founders should not be “loaded” with higher taxes to “fund a bigger safety net”.
He said: “Diluting the reward by hiking National Insurance and income tax on the self-employed, while expanding state provision around them, doesn’t make Britain more entrepreneurial.
“It makes self-employment look more like a worse-paid version of being an employee, with none of the upside.”
