Ed Balls' commitment to a 50p tax rate sparks a vital debate

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Since Ed Balls delivered his 'budget surplus' mantra to the Fabian's conference on Saturday, seasoned with the promise to restore the 50p in the pound top rate of tax, Twitter and other social media have resembled the battle-fields of the First World War - often with about as much constructive effect.

From the left there came a predictable chorus of hurrahs, laced with the joy that the bankers, millionaires and other assorted 'fat-cats' were, anyway, due their comeuppance.

Ed Balls has conceded that Labour "will have to make cuts" if the party wins the next General Election
Ed Balls has conceded that Labour "will have to make cuts" if the party wins the next General Election Credit: Chris Ison/PA Wire/Press Association Images

From the right, an equally predictable harmony of wealth-creation defenders and those chanting that a 50p top-rate would not swell the Treasury coffers but rather the priority queues of First and Business Class passengers at various airports.

This is a vital debate, the outcome of which will be a key determinate of the outcome of the May 2015 General Election. It is not being well served by the 'twitterati' of either political persuasion.

Historically, governments have taxed for a purpose. William Pitt the Younger in 1798 introduced income tax to raise funds to help pay for the war against Napoleon, for example.

Labour wants to reinstate the 50p tax rate for those earning over £150,000
Labour wants to reinstate the 50p tax rate for those earning over £150,000 Credit: Gareth Fuller/PA Archive/Press Association Images

Since then, it has become more veiled, more generalised, and more opaque; it has also been the focus of essentially un-economic and non-fiscal purposes.

Two of the most 'honourable' explanations for any level of general, or specifically income, tax are, one to distribute wealth or, two, to stimulate growth.

Many honourable men and women, over many years, have subscribed to one or the other.

It is the blurring of purpose that needs to be addressed if this electorally sensitive debate is to be conducted intelligently.

The blurring purposes of taxation need to be addressed
The blurring purposes of taxation need to be addressed Credit: Tim Goode/EMPICS Entertainment

Should some, on the right, believe that lower rates of general, and especially income and capital, taxation to be the Holy Grails of deficit reduction, recovery and growth, they should say so.

Should others, on the left, believe the rich have had it too good for too long, that 'fairness' has been left on the back-burner and that a little light fiscal retribution is now in order, they should, equally, spell it out.

Amidst the cacophony of comment currently there is no such honesty nor clarity from either side.

There needs to be.

Read: Ed Balls says Labour is a 'pro-business party'