Top tax rate ‘could go up to 60p’ if Labour win next election
Ed Balls could consider increasing the top rate of tax to 55p or even 60p if he became Chancellor, former Trade minister Digby Jones claimed today.
Lord Jones, who was never in the Labour Party but held office under Gordon Brown, was speaking after Mr Balls said that a Labour government would restore the 50p top rate of tax for the life of the next Parliament, to help reduce the country’s deficit. Labour introduced a 50p rate after the 2008 bank crisis, but it was cut to 45p by George Osborne. Lord Jones, the former Director General of the CBI, told the BBC Radio 4’s The World This Weekend programme: “In the last few months we’ve got, oh, ‘if it creates wealth let’s kick it’ – really go for energy companies, really go for house-building, bankers, this time it’s going to be the high-earners.”
He added: “I am amazed he’s going to keep it at 50(p). I’d expect if he becomes Chancellor of the Exchequer we could be looking at 55, 60 on the excuse he gave today.”
Mr Balls spent today defending his proposed tax rise, which would apply to incomes above £150,000. Though polls suggest that the idea is popular with people on average and low incomes, there was a strongly negative reaction from business leaders.
Asked on the BBC’s Andrew Marr programme whether he would consider taking the top rate of tax back to 60p, Mr Balls replied: “Absolutely not.”
The shadow Chancellor’s announcement was included in a speech in which he set out how a Labour government would seek to close the gap between spending and revenues, so that the government borrows for investment but not to cover running costs.
There have been fierce arguments about how much extra revenue will come from raising the top rate of tax, with some arguing that it will do the opposite of what is intended by encouraging tax avoidance.
But Mr Balls found support today from two former Labour heavyweights, neither of whom were his natural allies. Alistair Darling told Sky News the 50p rate was part of a deficit reduction plan set out in a “very good speech”. He added that 15 months before a general election was the right time to make the announcement.
Andrew Adonis, a former Blairite Cabinet minister, added: “Over the three years that the 50p tax rate was in place, those with incomes of £150,000 and above paid nearly £10bn more in tax than thought when George Osborne chose to cut it.
“Restoring the 50p rate will ensure that everyone is making a fair contribution to paying down the deficit.”
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