IFS: 50p tax will raise 'little revenue' for UK economy

A leading centre for independent economic research has said the best evidence currently available suggests a 50p tax rate backed by Labourwill raise "little revenue" and make a "marginal contribution" to reducing the budget deficit.

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'Six out of 10 Brits' back Labour's 50p tax rate plan

Six out of ten Brits back Labour's plan to reintroduce the 50p income tax rate for the highest earners, according to a new poll.

The Survation survey for the Mail on Sunday found:

  • 60% agree with the policy
  • 17% disagree
  • 23% said they don't know or neither

While 40% of the 1,064 respondents disagree that the tax plan will make the rich leave Britain, 57% said they do not believe shadow chancellor Ed Balls will meet his pledge to balance the books in the next Parliament.

Balls denies Labour has an anti-business agenda

Shadow chancellor Ed Balls said restoring the 50p top rate of income tax does not mean Labour has an anti-business agenda.

Mr Balls told The Andrew Marr Show the plan would "raise a substantial amount of revenue" and that it was "a fair way to get the deficit down".

Shadow chancellor Ed Balls on the BBC's The Andrew Marr Show.
Shadow chancellor Ed Balls on the BBC's The Andrew Marr Show. Credit: BBC/The Andrew Marr Show

"This is not an anti-business agenda - it is an anti-business as usual agenda", he said. I'm pro-business, pro-investment but also pro-fairness".

The shadow chancellor also denied Labour would consider raising the income tax to 60p in the future.

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Labour's City guru denounces Balls' 50p tax rate plan

Former Labour City minister Lord Myners has denounced Ed Balls' plan to restore the 50p top rate of income tax, calling it a return to "the politics of envy".

Lord Myners told the Sunday Telegraph: “The economic logic behind his Ed Balls’ thinking would not get him a pass at GCSE economics.”

Lord Myners.
Lord Myners was City minister during Gordon Brown's premiership. Credit: Anthony Devlin/PA Wire

“By contrast to Ed Miliband’s recent interventions on energy and banking, which tried to reconcile competitive markets with Labour principles, Ed Balls takes us back to old Labour and the politics of envy.”

Read: Labour would restore 50p tax rate for higher earners

Miliband warns changes needed to cut welfare spending

Labour will "have to do more" to control welfare spending to meet its pledge to balance the books, Ed Miliband has said.

The Labour leader warned that major changes will be needed to "cut the costs of failure in the system" as the party creates its plan to wipe out the deficit by 2020.

Labour leader Ed Miliband.
Ed Miliband said Labour will 'have to do more' to control welfare spending. Credit: Tim Goode/PA Wire

Writing in The Sun on Sunday, he also dismissed criticism of Labour's plans to reintroduce the 50p top rate of tax, which shadow chancellor Ed Balls announced yesterday, insisting the move would not stop the wealthiest "working hard".

Mr Miliband wrote: "If we are to tackle the deficit, we also have to do more to control social security spending. That means making tough choices this Government has ducked, such as scrapping the winter fuel allowance for the richest five per cent of pensioners."

Read: Labour would restore 50p tax rate for higher earners

Alexander: 'Labour's hypocrisy on taxation breathtaking'

Lib Dem Chief Secretary to the Treasury Danny Alexander said "Labour's hypocrisy on taxation is breathtaking" after Ed Balls set out the party's economic policy ahead of the 2015 General Election.

Mr Alexander said the shadow chancellor's speech shows the party "have learned nothing from the last few years and would undermine the foundations of Britain's economic recovery" and reintroducing the 50 pence tax rate "wouldn't help".

Lib Dem Chief Secretary to the Treasury Danny Alexander.
Lib Dem Chief Secretary to the Treasury Danny Alexander. Credit: Alastair Grant/PA Wire

He said: "In Government they left a system full of loopholes for the wealthy to exploit.

"Thanks to our action in Government to raise capital gains tax, reduce pensions tax relief for the wealthiest, and tackle avoidance, Lib Dems in Government are raising more from those who have the most and making Britain more competitive."

Balls says Labour would restore 50p tax rate for higher earners: Latest updates

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Balls: It's 'not business as usual' for Labour on economy

Shadow chancellor Ed Balls said it is "not business as usual" for Labour after setting out Labour's economic policy ahead of the next General Election.

He told ITV News Political Correspondent Libby Wiener: "We need to have, and work with business to create, jobs and get the long-term investment we need.

"We set out the radical reforms we need to do that - it's not business as usual, it's change.

"Labour will get the deficit down in a fair way by not going ahead with that top rate tax cut, and we'll deliver the investment and jobs that we need for the future."

IoD: Labour 'must not revert to old socialist ways'

The Institute of Directors (IoD) said Labour must "drop its practice of knee-jerk reversion to the old socialist nostrums" if the party wants to be taken seriously by business.

Director general Simon Walker said: "The 50p tax rate - actually 52p, because the last Labour government manipulated national insurance contributions - greatly damaged Britain's claim to being seen as a low-tax economy and actually drove down total tax receipts.

A pile of British bank notes
Shadow chancellor Ed Balls said Labour would restore the 50p tax rate for higher earners. Credit: Tim Goode/EMPICS Entertainment

"It was, and remains, an envy-driven political gesture designed solely to drive a wedge between voters."

He added, "It will significantly damage Labour's credibility with the business community."

Balls says Labour would restore 50p tax rate for higher earners: Latest updates

Miliband: Labour 'will reverse the millionaire's tax cut'

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Labour will reverse the millionaire's tax cut because those with the broadest shoulders should bear the greatest burden.

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Labour will balance the books and reverse the millionaire's tax cut to get the deficit down fairly. http://t.co/eSVojxWE2C

Tories claim Labour has 'no economic plan'

The Conservatives claim Labour has "no economic plan" following the shadow chancellor's speech on the economy.

A Conservative spokesman said: "All Ed Miliband and Ed Balls offer is more spending, more borrowing and more taxes.

Ed Miliband and Ed Balls.
The Tories claim Ed Miliband and Ed Balls 'offer more spending, more borrowing and more taxes.' Credit: Chris Ison/PA Wire

"It’s the same old Labour - and hardworking people and their families would pay the price with a less financially secure future."

Balls says Labour would restore 50p tax rate for high earners: Latest updates

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