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Brown rejects 50% tax on £100,000 wage-earners
Joe Murphy and Nicholas Cecil17 Jul 2008
Downing Street today rejected calls for a new super-tax band on people earning more than £100,000.
A debate has been growing between ministers, Labour MPs and trade unions about whether to impose a tax rate of, say, 50 per cent on high earners.
Supporters of the idea, which will be considered at Labour's policy forum next week, say it could pay for extra help for low-earning households who are suffering from the economic slowdown.
However, allies of the Prime Minister made clear that there was no support for the demand at No10. "It is not something we are considering," said one.
From the Treasury, insiders said Chancellor Alistair Darling was not against the debate taking place but indicated there was little chance of any change to the current system of a basic tax rate of 20 per cent and the top level tax band, currently 40 per cent.
However, there is increasing agitation from ministers. "There is a debate about tax at the highest level of the Government," one Cabinet member said.
"Some people are arguing that we should raise more from the top to help those at the bottom." A number of ministers are calling for Gordon Brown to "be bold" on this issue but one believes that hitting the rich with higher taxes would be "political suicide".
Unions, including Unite, the GMB and Unison, and local Labour parties will step up their calls for change at a meeting of Labour's policy forum next week to discuss the manifesto for the next election.
Labour has become more and more dependent on the unions, because private donations have been drying up in the wake of the cash-for-peerages furore, and they now provide 90 per cent of the party's funding. The unions are calling for lower National Insurance payments for people earning up to £40,000 to be funded by bigger contributions from people on more than £100,000.
Such a policy would echo the fiscal strategy dropped by the Liberal Democrats, and the party's leader Nick Clegg will today pledge to fight the next election on a platform of lower taxes.
The Lib-Dems are proposing to cut the standard rate of income tax from 20p to 16p and to fund this largely with new green taxes, as well as closing loopholes allowing the better off to avoid paying some levies. Mr Clegg also wants to find £20 billion in Whitehall savings.
"We will get wasteful government spending under control and give the economy a boost by cutting taxes from the bottom for those who need the most help", he was due to say today in his new Vision for Britain speech.
However, the Lib-Dems risk being accused of drawing up a Budget which does not add up as Tory leader David Cameron, faced with the growing economic gloom, has raised the spectre that taxes may have to rise if his party wins the next election or that public spending cuts may have to be made.
