Balls commits Labour to raising top rate of tax back to 50p

25th January, 2014 11:12 am

Speaking at Fabian Conference in Central London today, Ed Balls committed the Labour Party to reintroducing the 50p top rate of income tax as a priority for the next Labour government.

Balls told the conference:

“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.”

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  • alexagiusuk

    How will Labour pay for increase the top rate of tax to 50%?

    • thewash

      Pay for it? The Treasury will benefit from it.

      • ButcombeMan

        According to the HMRC calculations it produces little or no extra overall revenue. Balls knows this, he is just playing juvenile games and playing to the gallery.
        It is about time Millband got the guts to remove Balls. Every time he opens his mouth on economic matters he reminds the electorate of Labours economic failings in which Balls played such a substantial part.
        Millibands instincts were right when he first became Leader, Balls was not his first choice.

        • thewash

          Perhaps you would direct me to where this HMRC opinion has been cited officially.

          • treborc1

            Just google 50p tax benefits or not.

          • ButcombeMan

            As another commentator said a simple Google search produces lots of information including parliamentary briefing papers.
            it is all very basic school boy economics, Laffer curve stuff which Balls ought to understand.
            There was a reasonable explanation by an independent commentator on Radio 4 PM today between about 1713 and 1717, it will be on “Listen again” shortly for you. Radio 4 talked about net benefit to Treasury of 100 million which is of course chicken feed in the context of HMG spending.
            Sensible economists know it is even more complicted than the HMRC calculations. The same money left in the hands of those whose money it is, might well be invested or spent, in either case to produce more wealth or jobs (and indirect tax).
            Balls just seems to be out of his intellectual depth. He ought to have had time to mug up on all this and make more sense.
            it is really quite bizarre that Milliband leaves him there if he struggles so with basic things.

          • thewash

            But still no official source for the HMRC opinion?

          • Holly

            There are however, ‘official’ results on the effect of higher tax rates….
            In Australia, the tax on Quarrying,(I think) was increased. Production fell to accommodate this, and having spent the ‘expected’ tax grab, BEFORE receiving it,(typical Labour) the increase resulted in achieving zilch for the government coffers.

            In France socialist policies were implemented, failed miserably, and had to be reversed….
            Look at Labour’s polling under Kinnock, and what the REAL outcome was.

            Far better to look at the REAL outcomes, not stuff dug up by civil servants, or government bods, the MSM, or even the ‘experts’.

            You can not beat using REALITY for getting a better handle on stuff.

          • thewash

            You referred to ‘a reasonable explanation’ and later ‘Sensible economists’ both being personal opinion to which, of course you are entitled. However I have read the HMRC paper from 2012 and my opinion of that is is they could not come to firm conclusions about the effect of the increase to 50% because the time was too short and many of those who were affected by it were paid up front before the start date of the tax so avoiding it.

            When Balls introduces it after Labour have won the next election I have no doubt that he will ensure that the effect of tax will be monitored carefully over a much longer time.

          • ButcombeMan

            if Balls carries on like this he is not likely to be Chancellor. Millband surely cannot leave him there.

            Why would any Chancellor or prospective Chancellor announce such a taxation change so far in advance? It just gives opportunity for evasion by those affected.

            Balls has presumably done it because he believes it will appeal to the extreme left and bolster his fragile position. In economic terms it makes no sense. So what we seem to be going to have, unless he is moved, is a repeat of the mindless economic vandalism of Brown. it will not appeal to many voters.

          • thewash

            Evasion is illegal. Some may attempt to avoid paying the tax in advance of it being applied, however, they will be unable to avoid it for a full five years.

            I don’t think Balls is too concerned about the extreme left. It is the majority of the electorate who are suffering at the hands of Osborn’s ineptitude who will see a government that is adopting a much fairer approach to applying taxes after Labour win in 2015.

          • ButcombeMan

            It is worth you considering, before you spout off quite so inanely, how direct tax was applied during the last labour governments. No such high rate for most of it and there was the ridiculous Brown episode over 10p tax.
            I am not a coalition or Osborne fan but the repeated raising of the direct tax threshold seems to me something very sensible that really helps the lower paid. it was something Gordon Brown never did but should have.

          • rekrab

            It’s also worth remembering the “Poll tax” and the now hated Bedroom tax”

            Why is it when the notion to tax those who have the most comes around we seem to go all weak and say we can’t do that or else they’ll leave.

            It’s a bit like the energy-price crisis, if these people leave because we make energy less costly so what, we will still have to provide energy.

          • treborc1

            Well 46 Labour MP’s decided to agree with the Tories and not vote and a few abstained, so a lot of the labour party seems to agree with the bedroom tax.

            Well again in 2008 labour upped the tax for the richest to 45% and kept it at that, then a month before the election he rose it to 50% obviously labour thought 45% was the right tax.

            The Poll tax is long gone and we ended up with the council tax which labour allowed to go wild.

            Energy well we should have been building our own power stations labour felt IT and computers were more important

          • treborc1

            I think tax should go up for the richest 1% after all labour made them richer so why not 55% make it worth while.

            But why not for the people on over £60,000 I means 45% for that lot would be a help would it not, we are all in it together

          • BillFrancisOConnor

            ‘Balls has presumably done it because he believes it will appeal to the extreme left and bolster his fragile position. In economic terms it makes no sense’.

            Evidence?

          • treborc1

            2008 to 2010 the tax was 45% I suspect the extreme left were Militant and it now seems the Unions are as well.

          • Steve Stubbs

            Presumably to measure the shortfall in collected tax that will inevitably follow from those 1% who already pay 30% of income tax and some of whom who will take avoiding action..

          • BillFrancisOConnor

            Yup just what I thought no evidence, no references, nothing.

          • Holly

            Sorry.

          • treborc1

            HMRC’s estimates mean it is also possible that the 50p rate would be somewhat more effective at raising revenue than their initial analysis suggests. HMRC made their calculations at great speed on the basis of one year’s data that had only just become available. Indeed only around 95% of the data was available at the time they made the calculation. By
            now they have data for 2011–12 too, and soon they will have data for 2012–13 as well. Given this there is certainly a case for HMRC looking again. IFS researchers also now have access to much of the relevant data and we will also be looking at this issue over the course of the year.

            But at the moment, the best evidence we have still suggests that raising the top rate of tax would raise little revenue and make, at best, a marginal contribution to reducing the budget deficit an incoming government would face after the next election.

            IFS…

          • BillFrancisOConnor

            ‘Sensible economists’? Like who for example?
            I can hear a great big silence coming.

          • Holly

            Balls??
            Shhh.

          • Steve Stubbs

            You could start with the report in the Sunday Times in November that the richest one per cent of us –
            the 300,000 people earning over £160,000 a year – contribute 30 per cent of all the income tax revenue. In 1979 the richest one per cent contributed 11 per cent of tax revenue – although the income tax rate they paid, 83 per cent, was much higher.

            How much extra tax will the rich be paying this financial year
            2013-14 with the 45p tax rate, than they paid the previous year when they paid 50p? We won’t know until the financial year is over but a monthly tally suggests a matter of billions. In the first month alone it was £1.3bn.The Spectator have produced a graph showing how the share of income tax paid by the rich has increased since the 50p rate was abolished.

            Some of this will have been achieved by delaying bonuses until this financial year – but that does rather confirm that tax rates have an impact on behaviour.

            The reality of course is that this is nothing to do with raising extra revenue to reduce the deficit, this is standard Balls ignoring the truth. The man is an economic idiot.

          • BillFrancisOConnor

            The reality of course is that this is nothing to do with raising extra revenue to reduce the deficit, this is standard Balls ignoring the truth.

            Evidence?

          • Steve Stubbs

            Not even Balls believes that additional revenue will be raised by upping the rate. That flies in the face of all the empirical evidence (google laffer curve et al). This is party politics in its rawest form, or so called dog-whistle politics. You know it, I know it, Balls knows it. OK, if he just wants to attack those earning over £150,000 a year – just do it – openly and honestly. Don’t pretend it is something else.

          • BillFrancisOConnor

            Please don’t tell me ‘I know it’ or that ‘Ed Balls knows it’- you’re not a mind reader.Provide the references and evidence that this measure does not generate greater income for the revenue – then we can debate it.

          • Holly

            Ed Balls.

          • Steve Stubbs

            Some things are so self-evident that there is no point is listing the whole gamut of economists and economic reports who will tell you that is so.

            I look both ways before crossing the street as it is self evident that if I don’t it will hurt. I can’t of course quote you the evidence for this, never having been knocked down

            I suggest you are trying to be provocative, perhaps to engender more discussion on this subject. You seem to be achieving that. The proof of the pudding will of course be in the eating. Before the next general election we will have the treasury report on the impact of tax revenue of a whole tax year on the 50% rate, unaffected by the delayed bonuses etc. . All the indications so far as collated by the New Statesman on a monthly basis point to a significant reduction in the tax take from that 1%.

            Hey! Lets not let reality get in the way of a good arguement.

          • Hugh

            Not sure what you mean “cited officially”, but here is the HMRC study:
            http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf

            “[T]he underlying yield from the additional rate is much
            lower than originally forecast (yielding around £1billion or less), and that it is quite possible that it could be negative.”

            And this:

            “This report has also described how the impacts of increasing the highest rates of tax mayextend well beyond the direct Exchequer impacts. In particular, other things equal, high tax rates in the UK make its tax system less competitive and make it a less attractive place to start, finance and grow a business. The longer the additional rate remains in place the more people are likely to consider it a permanent feature of the UK tax system and the more damaging it would be for competitiveness. This suggests the negative impact on GDP may increase over time, and therefore the direct yield (and revenues from other tax bases) might fall over time toward or beyond zero.”

          • thewash

            I see you have been very selective with your quotes. The fact is the HMRC report is full of conjecture, based on insufficient evidence and speculative opinion.

          • Hugh

            I linked to the whole report, so you’ll be able to tell me where it supports your certainty that the Treasury will benefit from it.

          • ButcombeMan

            it is not definitive but it is rational and based on analysis of the figures by HMRC & Treasury statisticians. Balls if he was wise would not carelessly discard it, nor should you.
            The basic Laffer curve principles are widely accepted by economists and intelligent non economists. Balls seems to think he is smarter than all those opinions.
            There is no evidence that he is. Given his record recently and when joined at the hip to Brown, he is fairly dim on economics. Milliband should move him, he has zero credibility.

          • JoeDM

            Balls does not seem to be interested in the economics of high direct tax rates, just in old Labour politics.

          • BillFrancisOConnor

            based on analysis of the figures by HMRC & Treasury statisticians.

            What figures? Where? Do you have the names of any of the ‘statisticians’?

          • ButcombeMan

            Oh do get a grip.You have been told how to look for information on this. Most people understand that individual Civil Servants do not get named in such circumstances.

            Balls is making it up as he goes along. in total dissarray. This morning he said he wanted to take Winter Fuel Allowance off richer people. Well yes, I am with him in principle indeed personally I would not be starting from here.

            The WFA should never have been started in its current form, it is grossly inefficient in administration costs and Brown should have known better.

            If a WFA is justified it should have been paid as a winter bonus incoporated in State Pension and subject to tax.

            The problem with Balls is he has no comprehension of the implementation costs of what he proposes, how to link WFA with income, how to deal with split households where one partner has high income ,one does not,

            He really is an utter clown. Milliband surely cannot put up with this rubbish for much longer.

          • BillFrancisOConnor

            Yup just as I thought not one shred of supporting evidence or references.
            You’ve just made up all this ‘sensible economists’, ‘HMRC Calculations’ ‘Everybody knows’ nonsense. You;re just making wide ranging and dogmatic generalisations with absolutely nothing at all in terms of evidence to back it up.

            My own opinion is that it is uncertain as to whether the 50p rate raises more income for HMRC but what is inarguable, it seems to me, is that raising the top rate of tax is, morally speaking, the right thing to do in the current situation.

          • Holly

            That’s just what Labour in Australia, and Hollande in France thought.
            Oh dear.
            Never mind eh?
            Balls can always lower it again….Providing he’s Chancellor.

          • ButcombeMan

            Your personal opinion is without much value if you do understand how to research the subject or understand Laffer. You are in the same position as Balls, playing dog whistle politics regardless of facts.

          • Steve Stubbs

            So you think it morally right to put in place tax changes that will inevitably reduce the tax take, at a time when we are running a huge but reducing deficit and borrow ludicrous amounts?

            My children when little always seemed to answer any explanation to a ‘why’ question with another ‘why’ to the point of exasperation. Somehow I am reminded of them right now.

          • BillFrancisOConnor

            Restoring the 50p rate is the right thing to do in the current situation.
            Employing children in mines generated revenue for coal mine owners as did employing slave labour at Birkenau for IG Farben – but they were morally indefensible practices (I’m sure you’ll agree) and had to be discontinued.
            While people are facing the horrors of the bedroom tax and while most low and middle wage earners are paying a heavy price for the crisis it is morally right that those at the top of society pay their fair share of the cost of restoring the nation’s finances to good health.

          • ButcombeMan

            If you agree about what 50% tax as suggested by Balls would produce, why all the posturing and trolling?

            if you just wanted to make the “moral” case, why not be honest and do that ab initio?

            One can make all sorts of “moral” cases for forced extraction from higher earners, there are other macro economic reasons for not doing them.

          • BillFrancisOConnor

            I know you and your mates on here don’t really go in for seeking independent references to support your arguments. I did a Google search this is literally the 1st piece I came across. It’s from Tax Research (hardly a Labour Party Front Organisation). It shows raising the top rate to 50p raises between £5-6 billion:

            http://www.taxresearch.org.uk/Blog/2012/02/29/the-50p-tax-rate-lets-shatter-the-myths-behind-the-telegraphs-letter/

            Any danger of providing counter references? Given the form so far – not a chance.

          • Hugh

            Tax Research (AKA Richard Murphy) is a left-wing tax commentator. He is, in fact, as about a close a Labour front as one can get in tax analysis – as I would expect you to know. You’ve been provided the counter references: the HMRC study, referenced above, which the IFS, though equally stressing the uncertainties, has endorsed as a sensible approach.

          • ButcombeMan

            Listen lad. I don’t have any “mates” on here. I am an independent free thinker. I rarely come here, the Balls, patent nonsense of him, tempted me in.

            I am truly shocked that Milliband keeps Balls in his position.

            Balls to my mind, is very near men in white coats calling on him. He looks to be dangerously flaky and his body language and behaviour, to me, confirms it. Is he cracking up?

            How on earth does someone like him get anywhere near, dangerously near, become Chancellor of the UK?.

          • Holly

            While Australia & France’s results of higher taxes ARE FACTUAL.
            No one needs to look at HMRC to figure out what will happen, it happens…No if’s or but’s.

    • Holly

      By starting the 10p tax rate again.

      Will this include all those at the bottom, recently taken out of paying tax, due to the higher £10k Personal Allowance that comes in this April?
      At what stage will this 10p rate kick in?
      Is he going to scrap the 20p tax rate?
      How will he ensure that the higher earners will stay based in the UK, and how will he ‘plug any shortfall’ if they scarper?
      Not really clear, going on what I have read above.

      • BillFrancisOConnor

        The 10p rate will start at above the current exemption level which will be £10,000 by the time of the next election.

        • Holly

          Where, in the above post does Balls say ‘the 10p tax rate will kick in at £10k’?
          What he does say is, ‘we want a lower 10p starting rate of tax, which would help make work pay and cut taxes for 24 million people on lower and middle incomes.’

          So does he plan to scrap the 20p tax rate, thus genuinely lowering the tax paid by middle/lower incomes, because he does not actually say, ‘I will scrap the 20p rate for a 10p rate’. He also fails to say at what point this 10p rate would start, or how long it will remain.
          He says, ‘for the next parliament the 50p rate will be restored’, but does not say the same for the starting rate, or whether he will fiddle with the thresholds of the lower rate.

          • BillFrancisOConnor

            I think it is pretty clear that the thresholds of the lower rate (ie below 40%) will change.

          • Holly

            Mind reader eh?
            There is nothing ‘clear’ about the re-introduction of the 10p starting rate.

          • BillFrancisOConnor

            As quoted in The Telegraph:

            Balls says:
            “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”

            http://www.telegraph.co.uk/news/politics/labour/10596744/Ed-Balls-Labour-will-bring-back-50p-tax-rate-for-rich.html

            The 10p rate therefore refers to the rate at which people START paying tax – ipso facto above the tax exemption level in 2015.

          • Holly

            There is nothing to stop Balls from changing the starting point when re introducing the 10p starting rate.
            He simply starts it from £0-£10k.

          • ButcombeMan

            With no indication of how he would pay for that.

            What an utter clown he is.

    • robertcp

      Eh? Governments don’t pay for an increase in taxes because it should increase revenue.

    • leslie48

      It will come out of their gross salaries at source like everyone else hopefully there’s no funny business at the Inland Revenue.

      • jaime taurosangastre candelas

        I think the “funny business” happens in Accountants’ offices. I believe the public servants of the HM Revenue would not collude in that.

        I have heard of colleagues who do private work can elect to do so through their own company, and so “income” which is fees in any normal sense get a different tax treatment, and even then at the end of the year they can choose to take a “stipend”, a Director’s Dividend, a salary or a grant of shares in their own company, none of which is subject to income tax apart from the salary element.

        I do not do private work. My sole income is my salary, which is PAYE.

  • MonkeyBot5000

    We need to go much harder after the billions in tax that are evaded each year. If we got hold of that money, we wouldn’t need to raise the top rate of tax.

    • treborc1

      It’s all about trust do you trust Ball’s or Osborne, do you trust Miliband or Cameron… not on tax not even if I’m struggling, what matters to me is that the recovery keeps going for my kids and my grand kids. We all know in every recession and boy this was not a recession this was nuclear explosion, the poorest always take the worse hit, hardly the rich are hurt, but we have always known we are all in it together was bull.

      But the question is simple do you trust labour or the Tories and the fact is we are in recovery now, slim one yes will labour come in and ruin it, it’s the same question the public had to decide under Kinnock, and the public said no, sadly we ended up with Major.

      • TomFairfax

        There is also the possibility that neither is up to the job or trusted. I really hope George is still Chancellor in 2015, because he continually puts his foot in it, and his rhetoric never matches his actions. Plan A was to eliminate the deficit in this Parliament, not end up copying the opposition promise to sort it out in the next.

        • treborc1

          I’ve a feeling with Ball’s most of this came from his tutor and big mate Gordon Brown, the one he backed over the removal of the 10p tax band

      • MonkeyBot5000

        That’s nothing to do with what I said and you can’t just reduce the issue to a binary choice between supporting Balls or Osbourne. As it happens, I don’t particularly trust Balls or Osbourne – partly because billions were evaded in tax each year under both their watches.

        The article says that the 50p rate of tax brought in £10bn over 3 years, but tax evasion is estimated to cost 9 times that every year. Is it really that controversial to say that maybe we should go after that money rather than just tinkering with the rate for the people who are actually paying?

      • MonkeyBot5000

        That’s nothing to do with what I said and you can’t just reduce the issue to a binary choice between supporting Balls or Osbourne. As it happens, I don’t particularly trust Balls or Osbourne – partly because billions were evaded in tax each year under both their watches.

        The article says that the 50p rate of tax brought in £10bn over 3 years, but tax evasion is estimated to cost 9 times that every year. Is it really that controversial to say that maybe we should go after that money rather than just tinkering with the rate for the people who are actually paying?

    • BillFrancisOConnor

      Evasion is actually illegal- you can, in theory at least, end up on D wing if you do it. Are you sure you don’t mean tax avoidance? If so that’s really hard to do.

  • JoeDM

    Just look at what high taxes have done to France !!!

    • thewash

      75% in France – 45% in this country, to go to 50% if Labour wins, hardly an exact comparison.

      • Holly

        Why didn’t Labour introduce the 50p tax rate back in 2008 when the economy hit the buffers, if it is such a good idea?
        If this is a good idea, why did Brown wait nearly two years before implementing it?
        Why has Balls waited three years just to regurgitate it?
        For thirteen years the top rate of tax was 40%, it is now 45%. Higher than in ANY year under Labour, apart from the last dying breath in 2010.

        Who is zooming who here?

        • robertcp

          Labour should have introduced a 50% tax on very high earners in 1997.

          • Holly

            We could have saved ourselves a lot more grief if Labour hadn’t got in in ’97 to start with. I hope we have all learnt something.

            Now we have them trying to stave off any further good news for the UK economy, because they know they are a busted flush, where the economy is concerned.
            After the Balls plan on taxes, I am even more convinced, (than I was when Idiot boy made his energy freeze announcement) that these two are making this kind of announcement deliberately.

            Speaking as someone who’s highest salary was £17,500….
            Why should anyone have to pay 50% to the same Labour bods who created the financial mess in the first place?
            Labour and their supporters will of course think it is fair,right or moral, yet do not think WHY Labour feel they have to spend every last penny, and save nothing, and have a god given right to do so, while in office.
            You do not hear Labour proudly talking about the results the ‘golden legacy’ of their education policies had on today’s young Brits.
            By heck, they only said, ‘sorry for dumbing down education’ last week.
            Taken them THREE YEARS!
            To apologise to a generation!
            I hope every young person now in training or learning the basics, remembers that forever, and goes on to prosper.

        • Monkey_Bach

          If the 50p top rate of tax was a bad thing for the economy, business investment, incentivisation of the super-rich, and raised next to no money why didn’t George Osborne simply abolish it as soon as he became Chancellor, rather wait over a year before reducing it by a modest 5p from 50p to 45p in the pound?

          Eeek.

      • Steve Stubbs

        But where is Balls in all his lunacy heading? Are we going back to the 83% taxed and 98% unearned income taxation of previous labour administrations? Do they never learn?

        • robertcp

          Of course not, that was too high but 50% is about right.

          • ButcombeMan

            45 is higher than it was under the BLAIR/ BROWN governments for most of their rule and Osborne has more people paying 40% than Labour did. it is very hard to argue seriously that Osborne is undertaxing the better off on a historical basis.
            Balls playing to an uneducated mob, many of whom will not turn out to vote could turn out to be very foolish and damage business confidence.

          • robertcp

            Balls had no choice but to say that he will increase the top rate to 50%. It is not unreasonable to expect the rich to pay a bit more when we are recovering from a recession caused by rich idiots.

          • ButcombeMan

            Dont be silly OF COURSE he had choice , he made a speech full of waffle and nonsense with this concept of 50% tax planted in it to get a headline.

            it does not raise enough tax 300 million or 1 billion, whatever it is, to make much business. As has been seen it damages business confidence not only because of the tax impact but because of the signals it sends about “old labour” anti business ways.

            it looks now from the polls as though it has misfired.

            He will have to be moved

        • ButcombeMan

          Out of Shadow Chancellorship it is to hoped. Milliband struggles with doing what he knows he must.

          Balls should be moved, anywhere, Milliband knows that

      • Steve Stubbs

        But an indication of intent – a straw in the wind, so to speak.

        As much as it pains me to say it, it seems every single Labour administration there has been has ended in a financial mess. Does nobody ever learn from history, or are thy really condemned to repeat it?

  • jaime taurosangastre candelas

    The one figure that would be useful is what is the difference between total income tax paid by those on over £150,000 when the rate was at 50pence, and when on 45pence? Only knowledge of that delta will tell everyone whether this is a sensible suggestion.

    • treborc1

      They put up the tax for a reason , we know the reason it was set as a trap, simple, if this was such a great idea why not do it in 1997 or in fact 2008.

      Labour is trying to play a game , they want us to think they are harder on the rich then they are on the poor. sadly two seconds on Google tell us Labour played the game to make the richer a dam sight better off.

      When Brown took the 10p tax band off the poorest Ball’s was the first onto TV telling us all, it was right it was the right thing to do, he backed his old mate totally.

      It’s easy to come on TV and speak about broad issues without having to give any real details it’s so easy to say for example your going to clamp down on Tax avoidance, but again why not do it when in power.

      But this is as the Tories are saying the same old Labour, if high taxes are so good why not 55p or 60p games silly games.

      Labour is standing up for ordinary people we are hearing, unless your disabled sick, unemployed or working within the public sector, then labour will cap your benefits or wages.

      So who today are the ordinary people well of course thee beloved middle class hard working, meaningless

  • Dan

    It’s good as far it goes, but I still maintain this “surplus” crap is unnecessarily creating a huge problem. I wish Labour would realise how little the public care or even really understand the public finances in general. Rambling on about a surplus doesn’t mean anything to people except remind them of their perception that Labour spent too much money.

  • Grouchy Oldgit

    It’s morally right, but the real problem is many who qualify for 50% tax take advantage of every loophole in the book and probably pay less tax than ordinary workers. Much more effective is cracking down on (ie ending) tax avoidance.

    • treborc1

      Well yes as did many MP’s who flipped homes two three or four times to do the same, the issue is whether or not Avoiding tax which is totally legal will be stopped by a labour government who actually use the avoidance them selves.

      Blair has so many companies nobody knows what and how much the little man pays.

      • Steve Stubbs

        Which of course included Balls and Mrs Balls, nee Cooper. They took more advantage of that than most.

  • Mr Arthur Cook

    What about VAT?

    • Holly

      Why didn’t Balls hike VAT on luxury goods?

      • ButcombeMan

        Define luxury goods.

        • ButcombeMan

          You dissapointed me Holly.

  • EricBC

    The idea that this shift in taxation will cause businesses or persons to leave the country is entirely ludicrous.

  • Daniel Speight

    Interesting to see Bill Gates supporting higher income taxes yesterday.

  • jaime taurosangastre candelas

    The tax rate has the headlines, but I think the more important part of his speech was the promise to reduce the deficit to zero by 2020. In rough terms, that is real cuts of £20 billion every year from 2015. Coupled with promises on all sorts of things like building up to 200,000 houses a year (cost £2 billion annually), there are going to have to be significant cuts in other budgets. Merely increasing taxation would not do it, I think, unless Ed Balls and Ed Miliband want to increase the overall tax rate on everyone by a sizeable amount.

    The problem for Labour is that the largest departmental budgets and spending are on things that Labour supporters do not want to see cut, such as health, social welfare, and education. That spending is so large that finding £20 billion to cut is a small percentage. Finding the same amount of saving is a much larger percentage cut in the other budgets, such as policing or environment or culture and sport.

    • BillFrancisOConnor

      ‘In rough terms, that is real cuts of £20 billion every year from 2015………..Coupled with promises on all sorts of things like building up to 200,000 houses a year (cost £2 billion annually)’

      Independent references? Evidence? Calculations?

      • jaime taurosangastre candelas

        Do you need your hand holding for primary school mathematics? Current deficit is forecast to be £96 billion in 2014/5. Divide £96 billion over 5 years to 2019/20. Roughly £20 billion a year.

        Now then, the difficult bit. 200,000 homes. Assuming they are social homes or starter homes, which is what is needed, and they are built using the negotiating power of government. £100,000 each for land and building materials. £2 billion.

        • BillFrancisOConnor

          Sorry I’m not going to debate with you while you’re abusive.
          Goodbye!

          • Why do you get abusive yourself. You are just as bad

          • jaime taurosangastre candelas

            I am very sorry Bill, I did not know that you were capable of debate. I will take you up on that.

            Now that I have provided my calculations (and indeed, “bench-tested” them with a real primary school child, my son who was slightly surprised to be asked to do maths while we cook the Sunday lunch, but he was not grumpy), what point did you wish to make? My main comment was that in my opinion the commitment to balancing the budget by 2020 is a policy that I believe will cause great disquiet in Labour circles, because there is no easy way to do it without cutting some things that Labour supporters want to continue uncut.

            Here is a small thought, and no I have no references. You recall Alastair Darling’s phrase of “cuts worse than Thatcher”? I think with the Ed Balls we will have “cuts worse than Darling”, if he is to keep to this policy.

        • Doug Smith

          Miliband is promising to build 200,000 homes a year by 2020, not each year until 2020.

          And of course, the promise could quite unsurprisingly go the same way as Blair’s promise of a ‘stakeholder economy’ and an ‘ethical foreign policy’.

          • BillFrancisOConnor

            Of course his argument is so full of holes that it is hard to know where to start.
            However, here’s a beginning:
            1) The deficit next year is forecast to be £79 billion pound not £96 billion. ( Funny that – Osborne told us he was going to eliminate it completely by 2015).
            2) The increased tax take is not factored into his calculation at all. Balls made it clear yesterday that Labour intends to increase the tax take , both through increased growth and higher rates for certain groups of tax payers.

          • BillFrancisOConnor

            You are of course quite correct. The plan is to build 200,000 houses a year by 2020 not in the years between 2015 and 2020 so that bit is nonsense as well.

          • rekrab

            Although we really do need to build 200,000 houses a year like now.

            The thing about taking lower paid tax earnings out of the equation is, that it encourages new employers to create the hours and pay around the lower rate of earnings to skip tax on, in the long run it will be counter productive towards raising good pay for all.

            We need to be bolder and stretch out the new economy, some-things got to change we can’t go on with business as usual.

          • Doug Smith

            If I was an LP supporter I’d be concerned about the leadership’s increasing isolation.

            The leadership appears to want only New Labour careerist clones as MPs/PPCs. And Miliband is determined to dump the unions while Tory links with the corporate sector remain as strong as ever.

            Labour will very soon represent no-one but a self-replicating parliamentary elite, increasingly out of touch with ordinary people.

            We saw how damaging this was during Blair’s era, when, for example, the PLP’s remoteness meant they had no knowledge of the developing housing crisis.

            Miliband should win in 2015, if only because of the presence of UKIP, but by 2020 I expect the Labour Party to be an irrelevance, a spent force.

          • rekrab

            I think there is a panic and stress around the labour party and it’s future as it desperately tries to cling on to the new labour tag.

            Yeah! I could really see this all going tits up and labour fading away if it continues with it’s depleted past idea of new labour and changes that don’t deliver for the majority.

          • BillFrancisOConnor

            We do indeed need to start building more new homes asap.
            It’s just in the context of this discussion our friend factored in the cost of building 200,000 new homes per year from 2015 onwards. Our policy is of course to build 200,000 homes a year by 2020. His calculation is therefore wrong.

        • ButcombeMan

          He is trolling. He cannot really be as stupid as he pretends

  • Monkey_Bach

    A little politicing from Balls which seems to have rattled a lot of right-wingers for some reason. I really don’t know why. The 10p starting rate and 50p top rate of tax won’t help or hinder many people at the bottom or top of the income scale as far as I can see. How the heck can anybody really believe that a 5% hike in the top rate of tax will cause an exodus of entrepreneurs and professionals, who have made their fortunes working in the UK by exploiting UK markets, from their current homes in Great Britain to some unmentioned country overseas? Income tax goes up by 5% for the top 1% and all our top earning surgeons, judges, lawyers, inventors, financiers, bankers, businessmen et al immediately pack their bags and head for pastures new, eh?

    Give it a break for goodness sake and screw your head back on.

    If moves like this are so unwise and unpopular amongst the electorate a decision like this would, by definition, be detrimental to Labour’s electoral chances and so increase Tory chances of remaining the largest parliamentary party after the 2015 general election. In which case I would have thought that right-wingers would be applauding Balls and urging him to go even further along the same lines but they’re not.

    I wonder why?

    Eeek.

    • BillFrancisOConnor

      100% agreement yet again.

    • David Battley

      A very fair point, but you miss the other side of the same coin: the right wing press are equally keen to accentuate the relative size of this gap, allowing the government to deny the labour party a toehold on the platform of “economic credibility”.

      Given the likely recovery by 2015, labour strategically need to have both credibility and a differentiating “USP” established by the time of the election – activity over this weekend appears to therefore be an opening salvo by both parties to create/destroy this position, and next week’s press will largely determine the winner of this particular skirmish.

      • Monkey_Bach

        It depends on what sort of a recovery it is and how long it lasts.

        The current recovery, if recovery it really is, is a pretty odd one which seems driven by consumer spending rather than business investment. China is very productive with a booming economy but a majority of the population have no share in the national wealth and, doubtless, would vote to elected another government if the opportunity existed: a government presiding over growing economy where prosperity is not dispersed and in which poverty, suffering, and social evils flourish is probably not really going to be seen as much of a success or be popular amongst the electorate. So although there may be notional growth on paper in the British economy if it doesn’t benefit all citizens in a fair and balanced manner the Coalition will most probably be stuffed. In 2015 house prices will probably be rising artificially quickly again – because Osborne stoked demand but ignored problems related to supply – meaning that people already struggling will experience even more difficulties in finding affordable accommodation; mortgages and rents will be rising noticeably, exacerbating the cost of living crises, and poverty will be growing conspicuously due to an apparently never-ending squeeze on wages and benefits. It will be interesting to see how many people straying from the current meaningless Tory desideratum – “Hard working people who do the right thing and want to get on” – Osborne can get away with throwing under the wheels of the bus before the population sickens enough to ditch the Tories wholesale.

        It’s not only about the economy you see, it’s also about society and the kind of world you want to live in and raise your children in. Personally I wouldn’t relish having to spend much time in Osborne’s cowardly new world of food banks, homelessness, misery, and injustice.

        • ButcombeMan

          The way to avoid your seven pestilences is not to overtax individual effort. it does have an effect. In my own field I deliberately eased back because of high tax. I did not need more money and it was hard earned in uncomfortable places. It was also an export.

          • Monkey_Bach

            If what you say was true there would be much less poverty, homelessness, and other social evils in the United States of America, which has low rates of taxation, than any European country. However, this is not the case. Millions of completely innocent men, women, and families, in the USA suffer third world poverty in the world’s most capitalist and biggest economy.

            http://www.cbsnews.com/news/80-percent-of-us-adults-face-near-poverty-unemployment-survey-finds/

            So, basically, you’re wrong.

            Eeek.

          • ButcombeMan

            Somebody once said

            ” YOU CANNOT TAX A COUNTRY INTO PROSPERITY”.

            It was absolutely true.

          • Monkey_Bach

            I seem to remember Winston Churchill saying something like that if memory serves. Possibly George Osborne should have thought of that maxim before he increased the indirect tax VAT to 20%, a very regressive move since both the rich and the poor pay VAT on the same goods at the same rate and so penalises the poorest the most because they have the least disposable income.

            The truth of the matter is that, in practice, you cannot reduce inequality, poverty, homelessness, social evils and injustice much without a progressive and predistributive/redistributive tax, social security, and universal healthcare system coupled with an enlightened government committed to intervene to improve the lives of the least well off citizens. Pretending that a growing, or even a perfectly functioning economy, can, in itself, produce the kind of society that most people want to inhabit and see their children grow up in and live their own lives in is a falsehood.

            Eeek.

          • ButcombeMan

            in the peculiar circumstances of the UK VAT system it is not quite so simple. The very poorest pay very little VAT. I am not a fan of 20% VAT , it is distorting the economy in favour of cash transactions and evasion, but your understanding of it is flawed.
            VAT is a tax system which works best when very thinly spread across everything. Sadly politicians of all parties have overcomplicated and strangled it in the UK.
            The kind of society I want live in makes work pay, for everyone and does not inhibit effort by overtaxing it.

          • Monkey_Bach

            Well, I’d try to make that argument to the Taxpayer’s Alliance, not exactly a friend of the Labour Party, who claimed that the VAT hike to 20% would, “… hit the poor and cost jobs…”.

            http://www.taxpayersalliance.com/economics/2011/01/todays-vat-hike-hit-poor-cost-jobs-2.html

            And for a more left leaning perspective what about an article from the New Statesman?

            http://www.newstatesman.com/blogs/the-staggers/2011/10/progressive-tax-vat-poorest

            Sadly you are wrong again. However, since you say you believe that work should pay you would no doubt be 100% behind the campaign to increase the minimum wage to the level of a living wage, which would make work pay and reduce the benefits bill in one fell swoop?

            Eeek.

          • ButcombeMan

            I do not disagree with the Taxpayers Alliance, I was not in favour of 20% VAT. it probably hits the country poor more than the city poor. Those who are more dependent on their cars to get about.
            I do not bother with reading the Staggers, I am in favour of increasing the minimum wage to keep up with inflation. Sudden large increases should avoided though

          • Monkey_Bach

            Actually I included a link to the New Statesman because the article presented data garnered from an official Office for National Statistics report showing that the poorest fifth of UK households pay significantly more in VAT as a percentage of their disposable income than the richest fifth. The article included a pretty little graph showing how the poorest fifth spend nearly 10% of their disposable income in VAT compared with 5% per cent for the richest households.

            The truth of the matter is that increases in indirect taxation, especially VAT, ALWAYS hits the poor much more severely than the wealthy.

            But never mind…

            Increasing the minimum wage only with the retail prices index only keeps the poorest workers eternally poor and inflates the welfare bill, most because rents often rise, and look set to rise, much faster than commodities; so unless you give such people generous top-ups, like Tax Credits, the poorest workers simply get poorer and poorer over time.

            Eeek.

          • ButcombeMan

            To amuse you I have now looked at the Staggers page. As it happens I remember seeing it before. I dismissed it then for the reasons I dismiss it now.

            I am unable to take seriously any journal that calls people spending more of the income on “new cars, holidays abroad and eating out” as being at all poor.

            I know poor, both as a child and as a (young) adult. It did not include those things.

            I rather think truly poor people would agree with me, not you.

            Your arguments are those of the comfortably off leftist, you sound as out of touch as Balls, Milliband, Cameron & Osborne.

          • Monkey_Bach

            It was actually the report drawn up by the Office for National Statistics I attempted to draw your attention to not the Staggers article that mentioned it but never mind. Nothing you have written and seem to believe with a completely sincere although in my view unfounded conviction makes any sense to me.

            You remind me of the man who, when freezing to death in the Arctic, prayed to become even colder more quickly to numb the pain he was suffering better and more completely.

            Me now, well, I prefer to kindle fires.

            Go in peace.

            Eeek.

  • Doug Smith

    Polling indicates that 60% of voters back reintroducing the 50% rate.

    There really is nothing more to this policy than that. If the 50% rate wasn’t favoured by the majority of voters there would be no talk of reintroducing it.

  • Bik Byro

    Let’s put taxes in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this:

    The first four men — the poorest — would pay nothing; the fifth would pay £1, the sixth would pay £3, the seventh £7, the eighth £12, the ninth £18, and the tenth man — the richest — would pay £59.

    That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner said : “Since you are all such good customers, I’m going to reduce the cost of your daily meal by £20.” So now dinner for the ten only cost £80.00.

    The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the £20 windfall so that everyone would get his “fair share?”

    The six men realized that £20 divided by six is £3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

    And so the fifth man paid nothing, the sixth pitched in £2, the seventh paid £5, the eighth paid £9, the ninth paid £12, leaving the tenth man with a bill of £52 instead of his earlier £59. Each of the six was better off than before. And the first four continued to eat for free.

    But once outside the restaurant, the men began to compare their savings. “I only got a pound out of the £20,” declared the sixth man who pointed to the tenth. “But he got £7!”

    “Yeah, that’s right,” exclaimed the fifth man, “I only saved a pound, too . . . It’s unfair that he got seven times more than me!”.

    “That’s true!” shouted the seventh man, “why should he get £7 back when I got only £2? The wealthy get all the breaks!”

    “Wait a minute,” yelled the first four men in unison, “We didn’t get anything at all. The system exploits the poor!”

    The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO POUNDS short of paying the bill! Imagine that!

    • jaime taurosangastre candelas

      A nice little analogy, but flawed I think in that the paying customers would all be smart enough to know how it works. The policy of the Ed Balls is aimed at those who do not have much sense, only envy.

  • ColinAdkins

    A tactical mistake. I am for keeping the 45p but kicking it in circa 100-120k. I am for setting the relatively well off against the rich by ploughing the proceeds into increasing the point at which the 40p is paid. It all the right-wing press’s fury over Balls’ statement they have failed to mention how they made no noise about Osborne bringing more people into the 40p.

  • leslie48

    As someone pointed out on the Guardian blogs and I will pass it on as its good but the tabloid led BBC will never use it. “The hysteria in the right wing press about the 50p rate can soon be dispelled by making a few simple international comparisons: Sweden (57%), Belgium (55%), Holland (52%), Austria (50%), France (up to 75%), Spain (52%), and even Germany (45%) has a 26% additional tax for social security. The UK has for a long time been one of the lowest tax regimes in the developed world for the wealthiest people, and it is only the powerful banking and financial sector lobbies which have fought tooth and nail to keep this situation”.

    • Hugh

      “The UK has for a long time been one of the lowest tax regimes in the developed world for the wealthiest people,”

      What’s your source for that? The OECD average for top rate tax is 41%.

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