Workers over 40 would be charged a 2.5% tax on their salary to pay for social care in their old age under a plan being looked at by the Government.
Health Secretary Matt Hancock wrote to all MPs and peers last week, finally sparking cross-party talks on how to deal with Britain's social care crisis.
The German-style tax has been considered for a number of years and is reportedly Health Secretary Matt Hancock’s preferred option.
After it was suggested by the Commons Communities Committee in 2018, Mr Hancock said he was “attracted” to the idea.
But Barbara Keeley, Labour ’s Shadow Minister for Social Care, said it was not clear the plan would raise enough money to ensure the vulnerable had their costs met.
The Government has committed to the principle that nobody should have to sell their home to pay for their care.
Currently the elderly have to fund the full cost of their care until their assets – including the value of their home – falls below £23,250.
The ‘Social Care Premium’ plan would see over-40s, including retired people – pay into a ring-fenced pot for social care.
The pot could then be used to fund cash payouts to allow the elderly to pay carers, including family members.
Ms Keeley said: “It’s not clear that this proposal would raise the funding needed for the increased access to publicly-funded care needed to ensure vulnerable people are not left with unmet care needs as they are now.
“Labour’s plans for social care reform would cap care costs, support the care workforce and introduce free personal care for older people.
“There is already consensus that these are the issues that a plan for social care reform must address and we need to see proposals from the Government that actually tackle these areas.”
The proposal is thought to be one of six that was set to be included in the Social Care Green Paper which was promised under Theresa May , but never published.
It’s unclear how the scheme, should it go ahead, would be means tested.
Currently income tax is only paid on earnings above £12,500 in a year.
Assuming the threshold to pay the additional tax was the same, it would mean someone earning £25,000 a year would pay £312.50 extra in tax.
Someone earning £30,000 a year would pay £437.50 and someone earning £50,000 would pay £937.50.
In his letter to MPs this week, Mr Hancock said “all views, proposed solutions, and concerns about reforming the way people pay for adult social care”.
He added: “Any solution also needs to consider the financial impact on taxpayers as a whole, and the competing demands on taxpayers’ money from other public services.”
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