I'm John Bachelor with my colleague and friend Joseph Sternberg, member of the

editorial board of the Wall Street Journal. He writes political economics column, he's based in London. And Joe I was unaware

that there was talk of a May 2nd general election and now I read in the

London Times, there's not going to be a general election in May. At the same time I go to the story I was anticipating,

taxes or tax hike or tax cut, and the Chancellor of the Exchequer surprises me.

Jeremy Hunt will use his budget to cut national insurance by a further two percentage points for 27 million workers in a move worth 450 pounds on average. Is this a tax cut or a tax hike or none of the

above? Is this good news?

Well, it's okay news.

So when they talk about national insurance contributions in the United Kingdom,

what they're talking about is the payroll tax which funds the National Health

Service primarily. And so this is equivalent to the payroll tax in the U.S. that funds Medicare

and Medicaid. And similar to the similar to the US there are different

tax bans for it which operate independently of the regular income tax.

So the view is that if they can offer a reduction in the national insurance taxes,

that will target the tax relief at lower earnings because of the way the taxes is collected.

But I think that the problem that they've got is that the Tories have a

political liability because the Conservatives are now presiding over a government whose tax revenue as a share of GDP or higher

than at any point since the immediate aftermath of World War II.

And this is supposed to be a low tax party and people are really

feeling the pinch in a very direct way especially because tax bills have been going

up at the same time that inflation has been, you know, raising the prices of food and fuel and all of the rest of it.

And so they are under a lot of pressure to show that they're grappling with that. of election will be. One reason they don't want to do it in May is that they are desperately hoping that people

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