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Wow. This is big. A key Labour taboo has just been shattered.
Gordon Brown has publicly opposed increasing the top rate of tax since 1997 (and, privately, probably since 1992, when a proposal for the rich to pay more helped cost Labour the election). For the last 11 years anyone in the Labour party who so much as hinted at tax increases for high earners was likely to find themselves being mangled by the Treasury briefing machine.
And now it's party policy.
The debate about this is going to rage for days and weeks ahead. Here's a sample of what's been said on the blogosphere already:
Fraser Nelson at Coffee House says the top 1% of earners already pay 23% of all income tax collected. He thinks there's no justification for asking them to pay more.
Enough is now known about tax economics at these salary levels to establish that raising the top rate results is a false god - the super-rich don't hang around to be taxed. That's why top tax levels have been falling worldwide to compete for the high earners. France has cut its top rate from 48% in 2003 to 40% now. So "tax the rich" is a useful political slogan, but is economically futile - as governments around the world know. As Boris Johnson said at the last Tory conference, we may not like the Masters of the Universe but there are plenty other parts of the universe they can move to.
Iain Martin at the Telegraph's Three Line Whip says that if the government "soaks the rich", they will leave. But he's more interested in the politics of the plan.It is not difficult to work out the politics of this: the Labour left will love it, and the PM's calculation is that after the carnage the banks have helped engineer so will many centrist voters who would previously have thought it sounded dangerously anti-enterprise. The suggested delay in implementation until after an election shows Brown will fight that contest painting the Tories as the party of the heartless rich. Vote Labour to increase taxes on the rich; what would the Tories do? You get the drift.
A difficult challenge for the Conservatives this but one they cannot duck: they have to calmly say that taxing the wealthy excessively will drive away many of those who can help engineer a recovery.
Sunder Katwala at Next Left, the Fabian Society's blog, says that there is strong opinion poll evidence apparently showing public support for tax increases on those earning more than £100,000. He predicts that this will persuade the Tories not to oppose the planned increase.A difficult challenge for the Conservatives this but one they cannot duck: they have to calmly say that taxing the wealthy excessively will drive away many of those who can help engineer a recovery.
The Tories know what their gut instincts will tell them. But the Conservative leadership may also know that they are going to be on the wrong side of public opinion - and their own voters too - if they cannot engineer another sharp handbrake turn tomorrow.
I don't know which way they will jump. But my (hesitant) prediction is that, despite internal wailing, their manifesto at the next election won't dare to oppose it.
In a later post, Katwala quotes research suggesting that the idea Labour only won in 1997 because it promised not to raise tax is a myth, because voters expected tax to go up regardless of what Tony Blair said.I don't know which way they will jump. But my (hesitant) prediction is that, despite internal wailing, their manifesto at the next election won't dare to oppose it.
Iain Dale says the amount raised by a 45p band would not justify the economic disincentive. He says the rise "marks the end of New Labour".
Tom P, a former TUC official who writes the Labour and capital blog, says he had to pick his jaw off the floor when he heard the news. He says that it will be hard for the Tories to depict it as a tax on aspiration because it will only hit high earners and that many of those affected are people that the punters blame for the financial crisis.
It's going to hugely popular on the left, and among disenchanted ex-Labour voters. It's difficult to argue that there's no difference between the parties now.
James Forsyth at Coffee House says that Gordon Brown has set a trap for the Tories, and that they should not fall into it by opposing outright the 45p proposal.Brown is hoping to create a situation in which the perception is that he is trying to save the economy while the Tories are just trying to protect their rich friends. Yes such a narrative is rubbish, but it could be politically potent. Falling that, Brown is trying to provoke a Tory split; hoping that Tory backbenchers will demand that the leadership oppose it at all costs. Brown knows that there are still few things the press likes more than a Tory splits story.
NorthernMonkey at LabourHome applauds the government for "taxing the rich to cut taxes for the poor".guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds
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