Dear Editor,
In his spring budget, UK’s Chancellor of the Exchequer, Jeremy Hunt, unveiled a fresh cut to national insurance contributions, indicating his future aim to eliminate such contributions entirely. He argued that these constitute a form of “double taxation”, hitting income that is already taxed (“National insurance cut tops UK budget as Conservatives also pinch key Labour ‘non-doms’ policy”, Business, 7th March).
It is, however, critical to highlight that in the UK, as with PRSI in Ireland, national insurance contributions are not a form of tax but instead, as suggested by the terminology, an insurance scheme providing entitlement to advantages under certain conditions such as the state pension.
Meanwhile, in Ireland, there is a push to expand PRSI contributions to include those already receiving the state pension. This could arguably be viewed as authentic “double taxation”. After all, all forms of pension, inclusive of the state pension, are taxed at full income rates. Furthermore, those who have already paid PRSI contributions during their working years and have been eligible for benefits won’t gain any additional “insurance” advantages.
Yours faithfully,
Felix M. Larkin
Cabinteely, Dublin 18