The time has come to end the continuing pretence by politicians over the true burden of taxation, according to Carol Barrie, tax partner at accountants RSM Bentley Jennison.
In the past week there has been an outcry about the withdrawal of the 10 per cent tax rate and its effect upon low income families, but, she says, this is just the tip of the iceberg.
Ms Barrie went on: "The truth is the majority of workers below retirement age are paying 31 per cent 'tax' on everything they earn above the current personal allowance of £5,435 (£104.50 per week). This includes workers earning the minimum wage.
"How can this be when the basic rate of income tax has been reduced from 22p to 20p in the pound? The answer is employees' National Insurance, which for 2008/09 is payable at a flat rate of 11 per cent on all earnings between £5,435 and £40,040 a year and one per cent on earnings above this.
"Do the politicians now complaining bitterly about the withdrawal of the 10 per cent band really understand the full extent of the burden imposed on low paid workers? Politicians would no doubt argue National Insurance is a separate levy to pay for state benefits and not a tax. This argument does not hold water given there is no longer any limit on employers’ contributions; employees pay one per cent on earnings above the normal threshold of £40,040 and only one state benefit, the retirement pension, is geared solely to the payment of NI contributions.
"Even the state pension is geared to contribution years in which you have paid or been treated as having paid National Insurance rather than the amount paid. It would be a simple matter for entitlement to continue on exactly the same basis with a pension credit for each year in which you have paid or been treated as having paid tax on earnings.
"Another Budget change which has received less publicity, is the upper earnings limit for National Insurance has been increased by far more than inflation from £34,840 to £40,040.
"People earning £40,000 and above eagerly anticipating an increase in their pay packet as a result of the reduction in the basic rate of income tax are going to be disappointed. The increase in their national insurance bill will wipe out any benefit."
Ms Barrie added: "Surely the time has come to accept National Insurance is de facto another tax and amalgamate it with income tax. Only then will the true tax burden on the people of this country be properly recognised.
"Cynics might suggest however, that it is for this very reason that tax and National Insurance are kept separate."