This necessary expansion of Britain’s welfare state is being paid for in the wrong way
NEITHER POPULISTS in general, nor Boris Johnson in particular, are known for solving difficult problems if they can be left to future governments. Yet Britain’s prime minister did just that on September 7th when he unveiled a plan to break an election promise and raise taxes by an annual £12bn , or 0.5% of GDP. The money will go to the National Health Service and social care, including residential care for the elderly. Taxes could be raised more fairly.
But this necessary expansion of the welfare state is being paid for in the wrong way. A measure that insures the estates of the elderly against catastrophe should have been funded by levying an insurance premium on older people in the form of higher taxes on property or inheritance. The government instead decided to raise all the new money by lifting national insurance and taxes on dividends.
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