How Rishi Sunak can ease the cost of living burden with his mini budget
However, the Center for Policy Studies, a centre-right think tank, suggested going further so Mr Sunak could say that no worker earning below the national wage would lose.
This could be achieved by raising the threshold to £11,284, protecting low and median workers, who earn equal or less than £27,500, from a tax increase in real terms of £182.21.
“It would only cost the Treasury a third of the revenue it expects to generate from the rise in the NI – around £4.7bn of the £12bn – and would limit the impact of the rise taxes on the wealthiest, as well as corporations whose own contributions to NI are also increasing,” the Center for Policy Studies said.
The IFS said it would be virtually easier to get money into workers’ pockets by raising income tax thresholds – which is another option – although the personal allowance has already been increased to £12,570, well ahead of the National Insurance basic level.
Stuart Adam, senior research economist at IFS, said: “The other issue is that they apply to different people. National insurance only applies to those who earn while income tax applies to everyone with an income. Raising the income tax allowance helps pensioners in a way that raising national insurance thresholds would not.
Benefits and discounts on energy bills
Mr Sunak could increase pension and benefit payments to ease pressure on poorer households. The Resolution Foundation has requested an additional 5% this year, on top of the current 3.1%, to help low-income people cope. They would earn an average of £530 a year.
The Chancellor said he wanted to target aid to these people, but was reluctant to do anything that would ‘produce’ higher payments in the long run.