Labour 'to put 45p tax on salaries above £80,000' to fund NHS rescue plan

Most of the funding for a £7.4bn-a-year cash injection for the NHS will come from higher income tax on top earners, Labour says

Rob Merrick
Deputy Political Editor
Monday 15 May 2017 15:53 BST
Jon Ashworth says those earning over £80,000 will be taxed 'a little more' to fund NHS

Labour is expected to propose a 45p income tax rate on salaries above £80,000, to fund its rescue plan for the NHS.

The party has revealed that most of the funding for its promised £7.4bn a year cash injection for the health service will come from hiking income tax on high-earners.

Official data appears to rule out bringing in that sum – up to £4.5bn – from merely restoring a 50p rate on the biggest salaries, people earning more than £150,000.

But lowering the threshold for the existing 45p rate from £150,000 to £80,000 risks a backlash from many more workers, who may not consider themselves rich.

In interviews today, John Ashworth, Labour’s health spokesman, appeared to confirm the return of the 50p rate for the highest earners.

Asked, on ITV's Good Morning Britain: “How much are you going to tax the wealthy? I mean, are you going to go to a 50 per cent income tax”, Mr Ashworth replied: “Yes.”

But, speaking on Radio Four’s Today programme, he also said: “As I understand it, we will raise something in the region of £4bn to £4.5bn from the income tax changes.”

At the moment, those earning between £45,001 and £150,000 pay income tax at 40 per cent. Those earning more than that are taxed at 45 per cent.

When George Osborne axed the 50p rate, Labour claimed it cost around £3bn a year, but the figure was fiercely disputed.

The new income tax rates will form a central plank of Labour's election manifesto, which is being unveiled in the North of England tomorrow morning.

“I think what you’ll see tomorrow is that when Jeremy Corbyn and John McDonnell outline the manifesto you’ll see them explain how the individual tax bands will work,” Mr Ashworth said.

In last week’s leaked manifesto, Labour simply refused to rule out income tax rises on salaries above £80,000 – while guaranteeing the 95 per cent of taxpayers earning below that would be protected.

Mr McDonnell, the Shadow Chancellor, has insisted all of Labour’s spending pledges will be “fully costed and the funding source will be identified”, in the manifesto.

“There is currently only one party which is committing not to raise taxes on middle and low earners and that is the Labour Party,” he said.

Today, Jeremy Corbyn pledged that Labour would spend an extra £37bn on the NHS, over the five-year parliament, partly funded by the income tax rise.

It would include £10bn of capital funding to make sure that NHS buildings and IT systems are “fit for the modern day”, amid concern over last week’s cyber-attack.

Labour says the cash would pay to take one million people off NHS waiting lists, guarantee access to treatment within 18 weeks and guarantee patients can be seen in A&E within four hours.

The party would also create a new £500m ‘winter pressures fund’ and help 2.5m people living with cancer.

A Labour spokesman told The Independent: "We will lay out our plans in full in the manifesto on Tuesday.”

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