It was interesting to hear that Ed Balls is promising that if they win the next election he will increase the top rate of income tax to 50%.

   At first sight there are many attractions to this, and it certainly deserves serious discussion.

However, it should be seen in the light of Labour’s own record when in Government and that of the present Coalition Government.

For almost the whole period of the Labour Government the rich paid income tax at 40% (lower than the 45% they pay under this Government). Labour only put the rate up to 50% a month before the last election.

Every year that Labour was in power they cut Capital Gains Tax for the richest – slashing it from 40% to 18%. High earners now pay Capital Gains Tax at 28%.                                      

Over the five years of this Parliament under the Coalition a millionaire (earning £1 million a year) will pay £381,000 more tax on their income than they did under the last five years of the Labour Government.

Ed Ball’s promises should therefore be seen as a pre-election gimmick. The uncharitable amongst us might also call it hypocrisy.

 

   Leave a comment