Yesterday [Saturday 25 Jan] Shadow Chancellor Ed Balls announced that the next Labour government will reverse David Cameron and George Osborne’s tax cut for people earning over £150,000 for the next Parliament to help get the deficit down more fairly.
In a speech to the Fabian Society Annual Conference, Ed Balls said that fairer deficit reduction meant that the top rate of tax would need to be raised from 45p back to 50p.
Ed Balls also announced a binding fiscal commitment that the next Labour government will balance the books, deliver a surplus on the current budget and get the national debt falling in the next Parliament .
Latest figures from HMRC show that – in the three years when the 50p top rate introduced by Labour was in place -people earning over £150,000 paid almost £10 billion more in tax, than was estimated when the government conducted its assessment of the tax rate in 2012. So the claims that this high rate of tax produced less tax take were wrong.
Labour plans a fairer tax system that backs ordinary working people.
So at the other end of the scale, Ed Balls said that Labour also wanted to introduce a lower 10p starting rate of tax to help make work pay and cut taxes for 24 million working people on middle and lower incomes.
In this major speech, Ed Balls said:
“We will make changes to create a fairer tax system. So we will crack down on tax avoidance, scrap the shares for rights scheme and reverse the tax cut for hedge funds.
“We want a lower 10p starting rate of tax, which would help make work pay and cut taxes for 24 million people on middle and lower incomes.
“And today I want to go further, to ensure that those with the broadest shoulders bear a fairer share of the burden.
“The latest figures show that those earning over £150,000 paid almost £10 billion more in tax in the three years when the 50p top rate of tax was in place than when the government conducted its assessment of the tax back in 2012.
”And when the deficit is still high, when tough times are now set to last well into the next parliament, when for ordinary families their real incomes are falling and taxes have risen, it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut.
“That’s why for the next parliament the next Labour government will reverse this government’s top rate tax cut, so we can finish the job of getting the deficit down and do it fairly.
”For the next Parliament, we will restore the 50p top rate of tax for those earning over £150,000. Reversing this unfair tax cut for the richest one per cent of people in the country. And cutting the deficit in a fairer way.”
Britain Will be Better under Labour
You can read the full text of Ed Balls’ speech here.
If you want a regular digest of stories from this website and updates from us click here