Boris Johnson and Rishi Sunak at war over £154 annual tax hike for £25,000 workers

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The Chancellor is reportedly “playing hardball” over the Prime Minister’s continual demands for cash – including the NHS and Social Care Levy which it is hoped will fix the UK’s care crisis. It would involve raising National Insurance for employers by two percent or employees by one percent – both of which would raise around £10bn-a-year.

The rise would cost a worker earning £25,000 an extra £154-a-year, while someone on £50,000 would be set back an extra £504.

No 10 and No 11 are also said to be negotiating a separate, multi-billion-pound boost for the NHS this winter to cover the period until the proposed levy comes into effect in April.

Mr Sunak is against the plans, primarily because they involve breaking a 2019 Tory manifesto pledge not to raise taxes.

The Chancellor reportedly believes breaking the promises would damage the party’s reputation for financial prudence.

And with Treasury coffers badly depleted by the Covid pandemic – it cannot afford to keep on shelling out cash to fund Mr Johnson’s pet projects.

A party source told the Mail on Sunday: “The Chancellor did not want to do this.

“He doesn’t think we should be increasing taxes when people are struggling to get back on their feet, and particularly not when we said we wouldn’t.

“So he has made sure he has played hardball over how the money is spent.

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“After it comes into effect in April, it will have to cover a lot of the cost of sorting out the NHS. He is not going to just hand over endless amounts of money.”

Another Tory MP claimed that a “Battle Royale” was going on over how the final plans will look.

They added: “Do we want to be hiking up taxes to preserve the assets of people who are much better off?”

A third added: “There are broadly two concerns. First, is [a rise in] National Insurance the right thing to do, as it’s a tax on jobs?

“It also has the generational unfairness aspect of taxing young people.

“Secondly, there is a broader question of whether it is right for a Conservative government to be increasing income taxes.

“What is the philosophical underpinning of this Government?”

The news emerged as the Prime Minister is reportedly set to reshuffle his cabinet as early as Thursday.

Foreign Secretary Dominic Raab and Education Secretary Gavin Williamson – who have both endured a torrid time over the handling of their respective briefs – are set to be moved, insiders claim.

Mr Sunak – increasingly seen as a rival to Mr Johnson – is believed to be safe.

This is because his popularity in the party and with the wider public would make him too much of a threat on the backbenches.

A senior Government source said: “This Government will not duck the tough but necessary decisions needed to get the NHS back on its feet.”

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