Death of New Labour denied

Published on Thursday 23 April 2009 22:08

GORDON Brown yesterday denied that the 50p income tax rate for high earners had sounded the death knell on New Labour.

The Prime Minister insisted the measure – to be introduced next April on annual earnings above 150,000 instead of a proposed 45p upper tax bracket – was a fair way to raise money to help the country recover from the recession.

It is one of a series of tax hikes for people on six-figure salaries that the Treasury hopes will generate 7 billion a year.

Mr Brown insisted the 50p rate – which breaks a Labour manifesto pledge not to raise the basic or higher rate of tax – was not "taxation for its own sake".

He said: "If we are going to give people opportunities they need for the future, then there has got to be a contribution by those who have the most, and who have gained the most over the last few years.

"This is not taxation for its own sake, it is tax for a purpose. This is Britain fighting back against the international recession, this is Britain taking bold action for recovery."

However, the move sparked a row among the Tories, with London mayor Boris Johnson leading calls for a Conservative government to ditch the 50p rate.

Tory shadow chancellor George Osborne insists the party's priority would be to reverse an 0.5 point rise in National Insurance that is due to come into effect next April and which would affect all incomes above 19,000. "I don't like it," Mr Osborne said of the new 50p rate. "However, I cannot promise to reverse it."

Mr Johnson said the higher bracket would hit the UK's wealth creators who were needed to lead the country out of recession.

"Penalising high earners with higher taxes risks undermining competitiveness and runs the risk of driving highly skilled workers away and deterring others from coming," he said.