UPPER-EARNINGS caps on long-term care and social security contributions could be scrapped, if politicians agree to a Budget amendment.
Currently, the upper-earnings limit is £331,584 a year. Earnings above that level are exempt from long-term care tax for individuals and from social security contributions for employers.
However, Deputy Max Andrews said that the “structural deficit” in both funds means that changes must be made to the way contributions are paid.
In an amendment to the 2027 Budget, the St Helier North Deputy said that scrapping the social security cap would generate an additional £11.3 million in income for the Social Security Fund by 2030, instead of decreasing the value of the fund by more than £31m.
He also said he did not agree with ministerial proposals to increase long-term care contributions to 2.5% between 2028 and 2030.
“I recognise that we face funding pressures and we must do all we can to support those in need,” Deputy Andrews said in his amendment. “I do not however support the Council of Ministers approach levying the Long-Term Care uprate on lower- and middle-income earners whilst those on the highest incomes are levied a lower effective rate.
“As it stands, income earned above the upper earnings threshold is not subject to social security and long-term care contributions. Given that the Long-Term Care Fund has a structural deficit I believe we have little choice but to abolish the upper earnings limit to prevent the burden of long-term care falling on low- and middle-income earners.”
An almost identical proposal was put forward by Deputy Tom Coles during last year’s Budget debate.
Voting on the amendment was taken in two parts, with the social security element defeated by 30 votes to 13, with one abstention, and the proposal regarding long-term care was rejected by 28 votes to 16.
Deputy Andrews continued: “I believe everyone should contribute a proportionate amount of Social Security and Long-Term Care contributions. We cannot allow this situation to continue where colleagues prefer to levy tax increases on low and middle income over high-income earners.”
He said that, if approved, his amendment could “generate a forecast £11.3 million and £11.5 million respectively for the Social Security and Long-Term Care Funds”.
The Budget, and the amendments, are due to be debated during the States sitting beginning on Tuesday 8 December.
