Letter: Labour's tax plans: gainers and double standards

Sir: In your leading article 'Alternative to the shopping list' (6 April), you claim that John Smith's alternative budget was a 'mistake' and imply that this cost Labour the 1992 general election. This is not so.

John Smith proposed a top-rate band of 50 per cent on higher-income earners and removal of the ceiling on the employee National Insurance contributions, thereby to fund modest improvements to the basic state retirement pension and to index-link child benefit fully. The Liberal Democrats put forward a similar policy. About 80 per cent of the electorate would have gained by these measures.

These proposals would have raised the highest tax band in the UK to the average of the other members of the European Union and would still have left the UK well below Germany (53 per cent), France (57 per cent) and the Netherlands (60 per cent). Moreover, employee and employer social security contributions in the EU are generally much higher than those in the UK.

Despite the serious misrepresentation, and in some cases downright lying in the Tory tabloids, Labour and the Liberal Democrats received a clear majority of the votes cast, some 53 per cent, for their tax and spending policies. These voting intentions were not translated into a parliamentary majority because the opposition parties were split. Britain's first- past-the-post electoral system, therefore, produced a Tory government with only 43 per cent of the vote. So it is a complete misreading of the 1992 general election result to claim that parties of the left and centre-left should abandon the case for higher direct taxation of the wealthy.

Indeed, if we are to restore full employment and begin to redress the growing and dangerous social division in our society, then Labour must reaffirm its commitment to income redistribution through a more progressive income tax combined with new taxes on, for example, environmental pollution. I hope that Labour's next election manifesto will include proposals along these lines.

Yours faithfully,

JAMES DICKENS

London, SE26

6 April