Super-rich face 50% tax
Donald Macintyre writes political sketches for The Independent, having been Jerusalem correspondent since 2004, covering Israel and the Occupied Territories, as well as travelling for the paper to Iraq, Turkey, Jordan, Libya and Egypt. As Political Editor and then Chief Political Commentator, he previously covered the John Major and early Tony Blair era. He has written for the Daily Express, Sunday Times, Times and Sunday Telegraph, and Sunday Correspondent. He is the author of Mandelson and the Making of New Labour (2000).
Sunday 29 August 1993
The possible new 'top people's' tax rate - as well as the imposition of 8 per cent VAT on private health care - is one of a range of ideas designed to symbolise the Government's willingness to ensure that the better-off bear their share of any increase in the tax burden.
One of the strongest complaints against rises in indirect tax - such as VAT and excise duty - are that they hit the poor hardest because they take a bigger proportional share of their disposable income.
An increase in top tax rates would affect far fewer people than the new 45 per cent band for all higher taxpayers suggested earlier this month by Keith Hampson, Tory MP for Leeds North-West, which would raise pounds 1.8bn.
However, although limited in revenue-raising terms, it would please 'one-nation' Tories and backbenchers who say they face complaints about the salaries paid to leading businessman, including the chairmen of privatised utilities.
Proposals for the imposition of VAT on private health charges have also circulated within the Treasury, although one senior member of the Government argued yesterday that it 'would mean a lot of aggravation for not much money': it would alienate many Tory supporters, not all of whom were rich. The private health insurance industry would also strongly oppose any such proposal on the grounds that health is exempted under EC regulations - although Italy imposes VAT on health care.
But the circulation of such plans is strong confirmation that Mr Clarke is considering further widening of the VAT base - charging it on newspapers and books being one possibility, which would raise about pounds 1bn. VAT on books would provoke immediate outrage as a 'tax on learning', but it could be offset by a simultaneous decision to outlaw the Net Book Agreement, which sets minimum prices.
The lively discussion in Whitehall about possible plans for new indirect taxes comes in the wake of the continued refusal of Michael Portillo, the Chief Secretary to the Treasury, to bow to pressure from fellow right-wingers on the Tory backbenches by ruling out tax increases in the Budget.
But one question that could yet face Mr Clarke will be whether to lift or abolish the ceiling on National Insurance contributions. Although this was discussed before Norman Lamont's March Budget, it was vetoed on the grounds that the Tories had condemned a similar Labour proposal in the general election as a 'tax on jobs'.
The conflict within Labour over economic policy resurfaced yesterday when Peter Mandelson, MP for Hartlepool, strongly attacked Peter Hain, secretary of the Tribune Group of MPs, for criticising the party leadership and advocating a return 'to the policies that failed in the early 1980s'.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...
£30000 - £35000 per annum: Recruitment Genius: An opportunity has arisen for a...
£30000 - £35000 per annum: Recruitment Genius: An exciting opportunity to join...
£30000 - £35000 per annum: Recruitment Genius: We have an excellent role for a...