National Insurance - too taxing?

Much was made last week of the Labour party's decision to stick with its policy of raising NI from April 2011, while at the same time the Conservatives vowed to reverse the policy should they win power. The Tories won the support of over 60 business leaders for their decision, and Sir Stuart Rose, the Chairman of Marks and Spencer, was one of those leaders.

On the news last week, Rose spoke eloquently in defence of the Conservative policy, repeating the mantra that an increased NI demand would be a tax on jobs at just the wrong time during the economic recovery. When pressed to suggest what taxes would have to rise to help reduce the deficit, he admitted that VAT would probably have to go up, and seemed relatively sanguine about that possibility.

Presumably then, it is unfortunate but acceptable for employees and shoppers to pay additional tax, but not employers? That doesn't sound fair.

For VAT is (literally and obviously) a tax on shopping. Surely the higher VAT is, the less we will buy. Either way round then, if NI goes up or VAT goes up or they both do, the economic money-go-round might be threatened. (I'm not convinced of this anyway: NI went up by a penny a few years ago without workers being dumped onto the streets, so why would that necessarily happen this time?)

It sounds as though Rose was just trying to dodge the financial contribution to the UK recovery that corporate citizens such as his company should surely be making. I'm not sure convinced these businessmen are being particularly public-spirited just when we need them to be, but am I surprised?