Tax subsidy scrutinised

/ 22 September 2014

The Treasury has estimated that a tax subsidy for the self-employed has risen from £1.7bn in 2011-2012, to £2.9bn this financial year. Oxford University professor of taxation, Judith Freedman, calls the increase “staggering”. Under the subsidy, the self-employed contribute less to national insurance as they are eligible for fewer benefits. Professor Freedman said: “There is a big subsidy being paid by employees to the self-employed. It is not a particularly well targeted way of encouraging certain types of activity.”

Source: Financial Times

Subsidy? When the self-employed pay less in National Insurance Contributions because they are eligible for fewer benefits? That seems to be a novel usage of the word “subsidy”. I pay less for my groceries than the family next door because…er… I buy less food. Does that mean that in their weekly trip to Waitrose (we do have certain standards in our road, you know) they are subsidising me? I had never thought of it in that way. And does my sister-in-law’s remarkable addiction to buying shoes represent a subsidy to those of us who have been wearing the same pair of solid black Oxfords since time immemorial?