LABOUR’s plan to re-introduce the 50p top rate of income tax has been incendiary. Troglodyte, backsliding old Labour has been the response from the business world. The politics of envy, it’s squeeze-the-rich 1973 all over again…
Critics of the plan, including sundry FTSE 100 chief executives, the CBI employers group and the Institute of Directors, claim that bringing back the 50p rate for any earnings over £150,000 could stop wealth-creating entrepreneurs coming to Britain and drive indigenous business talent overseas.
To which Labour, including shadow chancellor Ed Balls and former chancellor Alistair Darling, say in an era of chronic austerity we are either “all in this together” or some of us are enduring an “austerity” that is velvet-lined. The broadest shoulders should bear the heaviest burden, they say.
I am in Labour’s corner on this one. There is conflicting data as to how much the Labour-introduced 50p rate brought into the Treasury’s coffers before the coalition government reduced it to 45p in the last Budget.
But there is strong symbolic importance here. You judge a nation’s level of civilisation by its division of burden in order to foster communal morale in adversity. A financial Dunkirk spirit, if you like.
The issue should not be merely about pale disputed statistics, whether that applies to the level of taxation on the wealthiest in society or Middle Britain’s mooted cost-of-living crisis.
And the higher top rate said that a country laid low by banking greed thought it moral to utilise all available ammunition to shelter the most vulnerable in society in the six, eight, ten years of resulting bad times.
Most people do not need to be “motivated” by the risibly-labelled “compensation” to go to work. For most it is a case of gratitude if you earn a decent, let alone gratifying, basic wage and, a real bonus, actually enjoy your job.
It is also facile to compare, as some have, the 50p tax level we are arguing about today with the crazy 83p top rate brought in by what became the financially busted flush Labour administrations of the Seventies.
The former squeezing of the pips of the wealthy by chancellor Denis Healey was an unfair, ideologically crude way out of an economic hole. Today’s tax debate is completely legitimate against the harsh backdrop and within infinitely narrower financial margins.
And politics of envy? No, it looks more like a credible alternative definition of fairness, not totally dissimilar to the widespread negative view of Margaret Thatcher’s flat poll tax.
That was also seen as practically benefiting the richer rather than the great unwashed, even if seen through a strictly arithmetical prism the community charge could be defended as theoretically, almost theologically, “fair”.
I think Labour leader Ed Miliband is actually on firmer ground in suggesting a reprise of the 50p rate for the top tranche of earnings of the affluent than some of his other pledges.
His pledge to freeze energy prices for 20 months if Labour returns to power oozes populist over-simplication of an issue. Miliband’s idea to arbitrarily limit the market shares of the big five UK banks seems dirigiste and half-baked, while his producer versus predatory capitalism schtick has only alliteration going for it.
By contrast, I suspect many uncommitted voters think Labour has got it instinctively right on the 50p tax rate, whatever the dubious casuistries about blunting Britain’s business spear.