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50% tax rate may only be temporary, hints Darling
Joe Murphy23.04.09
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ALISTAIR DARLING today strongly hinted that his 50 per cent tax sting on the rich may be only temporary.
Amid claims he had killed off the New Labour project and City warnings of a super-rich exodus, the Chancellor stressed the new top rate will apply "while we resolve this situation".
The clear implication was that the 50p in the pound rate for the top one per cent who earn £150,000 could be abolished when the economy recovers.
"This is a pretty profound set of circumstances," the Chancellor repeatedly stressed to TV and radio studios to defend his package of measures which included tax raids on drinkers, smokers and drivers as well as record borrowing to make ends meet. "We have not seen it for generations, we have got to deal with it and I am confident that we will get through it," he added. Saying he had a "duty" to reduce borrowing, he went on: "I have also had to go to those people who have earned the most over the past few years, people in over £150,000, and say, 'you are going to have to contribute a bit more while we resolve this situation.'"
Mr Darling's remarks were a contrast with the last time Labour contemplated a 50p top rate, during the early Nineties, when Gordon Brown was shadow chancellor. Then, Mr Brown saw it as a fair top rate as part of a permanent restructuring of income tax bands.
He was over-ruled by Tony Blair, in one of their first clashes, who insisted on a pledge not to raise the top band.
Business Secretary Lord Mandelson, who was a key figure in making the case for New Labour to oppose higher tax rates, denied that the party had changed direction. "It's most certainly not the end of New Labour," he said. "We are not a high tax party. We don't tax for its own sake."
Shadow chancellor George Osborne today confirmed he would not promise to reverse the 50p rate. "I cannot promise to reverse the 50 per cent tax rate because my priority would be to avoid the other tax rises coming down the track, which is the National Insurance tax rise for anyone earning £20,000."
Borrowing one of Tony Blair's old campaign phrases, he went on: "We are going to try to avoid tax rises on the many not the few."
But Mr Osborne made it clear he would scrap the tax if he could. "I don't agree that long term higher marginal tax rates are good for this economy. Tony Blair used to make that argument," he said.
The idea of hitting the rich with a 50p top rate was tested by Labour focus groups and found to be highly popular with key Labour voters. Mr Darling reportedly resisted pressure to impose it at the £100,000 income band, believing that the public would not regard those earners as wealthy enough.
But the Chancellor and Prime Minister woke today to headlines that harked back to the high tax economy of the Seventies, including "Red all over" in the Times, "Return of class war" in the Telegraph and "Robin Good" in the Mirror.
Other criticisms focused on the Chancellor's prediction that growth will return next year and surge ahead to 3.5 per cent afterwards - a forecast contradicted by the IMF and derided as "fantasy" by Mr Osborne.
Mr Darling denied he was out of line with forecasters. He said: "If you look to next year, there are a range of projections by people - some are more optimistic than I am, some are more pessimistic. But I do believe that our economy will start to grow by the turn of the year.
"Growth next year will be modest, but I believe we can achieve a turnaround provided we continue to help people at the moment."
Reader views (31)
For those who don't believe in the brain drain and the wealthy moving abroad :
Well, I'm one of those high earners who moved to HK (albeit not just to escape the high tax regime). In the UK, I was paying tax + NI circa 70KGBP pa. really hard cash that is now lost to the treasury forever because I took my role with me to HK.
I would rather not work then pay 60% of what I earn to a totally useless government who will waste it all.
Similarly, I know lots of other expats in the same situation - they're gone, the roles in LN have gone and hence the tax they paid is gone.
And don't forget all those jobs going to India.
For those who say 'good to high tax for high earners', you just don't get it. Ultimately it will be you who will suffer. Not my problem. UK is bankrupt and I and many others have moved on.
Game Over.
- Sarit Shah, Hong Kong
Temporary, yes. 60% by October and 70% by January.
- Michael C, london uk
Duncan, the world is larger than Western Europe. There are lots of other countries that will welcome the jobs this budget will export.
A whinging hypocrite may I commend articulate rebuttal to my argument . Am I whinging absolutely there is plenty to winge about but what part of what I say is hypocritical? I'm simply pointing out what the effect of the government’s action. In a global economy those capable of creating wealth can choose where they want to create it. When all the wealth creators have left then the British public will really understand what poverty is.
Lower taxes make economies grow, higher ones kill them off. The current public sector orgy, especially their pensions will bankrupt the country.
- Ian, London
The idea that it is only the very rich who 'create the wealth' is completely wrong. Who taught all the bankers, financiers and business people how to read and write and to do maths in the first place? Who ferries them in and out of the city on the underground each day? Who keeps their neighbourhoods safe and who looks after them when they are ill? The answer is people who earn a fraction of what they make and without whom they would never have been able to get rich in the first place. It is about time they paid their fair share.
- Matthew Wellesley-Smith, Leeds, UK
So now Darling is back peddling after realising the damage he has done!
- Simon, London
Why does George Osborne keep quoting Tony Blair:'Tony did this', 'Tony said that', on matters fiscal. I thought Cameron was the designated heir to Blair, not Osborne. And I could have sworn Tony Blair was the much discredited (by the Tories), Labour Prime Minister.
- Val Daniels, Mijas Costa, Spain
Keith Price of Luton inadvertantly reveals Labours REAL budgetary intent. Punish the wealth creators, declare class warfare on behalf of the 'peeple'. well I'm a 'peeple' and I think his attitude is asinine. These are the very people who create and run companies and create REAL wealth creating non-public sector jobs. The very people we NEED to drag us out of the 'Brown stuff' ie debt.
He particularly emphasises a 39% tax rate as being somehow just. Interesting. I wonder if he is a Guardian reader. Last year Polly Toynbee ranted about tax cheat spivs avoiding tax using clever accountants. Yet curiously the Guardian Media Group itself by virtue of clever accountants only paid 16% tax on it's UK earnings. Hypocrisy thy name is Labour and preachy rich socialists. I bet Keith despite earning shedloads hasn't volunteered to pay extra tax.
Concerning things that are Green. Another budget false flag stealth excuse to tax the life out of the country? Is Polly Toynbee (Guardian luvvy) Green? Perhaps she walks to her Tuscan Villa every month or so? No she flies. Yes very green that.
see when the great and powerful use fossil fuels it's OK but when you and I fly or drive suddenly it's bad. More preachy rich socialist drivel!
- Ethan, UK
Keith Price from Luton - once again you display your true socialist colours with phrases like "It is from this class that the useless bankers have emerged".. The only posting so far that mentions the word "class" - the true politics of envy displayed by Keith, Gordon & Alistair. you all deserve each other
- Malcolm, London
Then he and Brown will increase it to 60%. No trust, they lie and lie.
- Geoff Coles, London and Cape Town
basic economic theory - lowering the tax rate, increases the tax take.......last one out, pls turn off the lights!!!
- Bob Holmes, london
This 39% tax bracket should be left as psrmanrnt as these overpaid execs in theHome Counties can easily afford it. It is from this class that the useless bankers have emerged who got us in all this mess to begin with
- Keith Price, Luton, England
Lets say something and when it goes down like a lead balloon we will move the goalposts.
Labour at its best??
- P. C., rainham. essex.
All the attention and publicty about the so called '..taxing of the wealthy..' is all a smoke screen to deflect attention away from the real tax increases that seriously affect the ordinary working family. Specifically the increased duty on petrol, alcohol and cigarettes. The extra duty on petrol alone will add disproportionate costs to working families, whilst such increases will have no such affect on the wealthy.
- Pete, South of England
Of course the 50% tax rate is temporary Mr Darling.
Just until the election then we can positively look forward to a Conservative government to rescue us from Labours failures. i say this as a life long Labour supporter who has had enough of this incompetent bunch of crooks.
- Mr S.Port, London
The photo say's it all. McBean thinks the public has been fooled, once again.
No. not this time, or ever again.
- Dee Jay, Fleet Hampshire
So we're led to believe "Mr Darling reportedly resisted pressure to impose it (the 50p rate) at the £100,000 income band" - would that be because MP's earn over £100,000 and under £150,000 (excluding expenses and 2nd homme allowances which aren't taxable of course).
- Malcolm, London
Even Tony Blair has left the country hasn't he....?
- Amoreno, Luxembourg
Ian try the tax regieme in France or Italy you'llsoon come scurrying home you whinging hypocrite.
- Duncan, Kent
"may only be temporary" - liar
- Dave Davies, Basingstoke
Smoke + mirrors. For a "temporary" increase in tax that in reality effects only a small percentage of the working population, the Government has achieved the following:
1. the fact that there was actually very little in the budget has been ignored by everyone as this has taken all of the headlines;
2. all of the Labour scandal stories have "gone away" from the front pages; and,
3. Labour have appealed to their core (Union bosses are too stupid (and too busy striking) to see through the spin.
Don't be fooled into thinking this strategy was all about taking from the rich and giving to the poor, far from it; this is all about going into hiding after leaving a trail of destruction using whatever spin Labour can. They'd be more than happy for this story about the 50% tax bracket to run and run and I'm sure that behind the scenes their spin doctors are fuelling the story.
- Carl, London
So now that the rich and the Bankers have been bailed out by the poor and the Taxpayers they now have a calendar to give them plenty of time to get their business in order to leave and then return when the coast is clear once again, NICE !
- Enuff, LONDON
As in it will be 70% if - heaven forfend - they win the next election.
- Paul, London
Temporary will be too late. I run a small business and as a direct result of yesterdays "soak the rich" (and I am not that rich) announcement I spent most of last night planning how many jobs in the business I can export to a country where the tax regime for entrepreneurs is less oppressive.
I work hard (circa 70 hours per week, create employment and carry the stress that brings with it) and how does the government want to reward me? In the last few years the have increased the tax I will pay if I can sell the business by 80%, CGT on business sales up from 10% to 18%, increased my total tax rate including NI to over 60%, taken away my personal allowances and inhibited my ability to pay into a pension for my retirement.
In the last year our business of only 10 people generated tax revenue of over £400k when you add up the total of VAT, PAYE, Corporation Tax and personal taxation.
I would rather create jobs in the UK if this is how the government is going to treat me I am going to look to have to look at creating employment in a country where the government better appreciates what I can contribute to an economy. The chancellor wants to create new jobs in technology and manufacturing but these are exactly the jobs I can move offshore. This budget will do long term damage to the economy. It makes the UK a place you would not want to build a business in. Once jobs have been created abroad they will not move back.
- Ian, London
the whole country knows where the cuts should be. but no typical labour tax the so called rich.many years ago i used to work all the hours god sent. in one job the so called workers were moaning about the "boss" buying a new car whilst they were getting no pay rises(labour goverment again)i said,who started the company up? the boss. why? and then it dawned on them.without the boss they would have no job. and all the tax increases were goverment led.this was when the so called saviour of the left jack jones wanted everybody to have the same wage.when i suggested that the cleaners shouldnt get the same pay as time served apprentices that was it. i didnt return. the company workers went on strike . the boss took his money and left the uk.brown is doing the same .thats why its going to take 10/20 years to get going again. by then china india and other countries will have overtaken us .get ready for the revolution because the tories wont save you
- Mikeee, peterborough ukere getting no pa
The UK's finances are in a parlous state, people throughout the country are hurting, yet this poor, yes, very poor excuse for a government still decides to play politics with the most important budget since the 1930s.
They are a sickening, malicious group of people, this Labour bunch and the sooner they are dismissed from the levers of power, the sooner the UK will be back on its feet.
- Bingham Macnamara, lymington, hampshire
Yes, temporary - On a Cosmic timescale.
- Jim, London
Why don't New Labour start to really save our money by getting rid of some of their very silly pet projects? By scrapping the ridiculous ID card and halting the infamous NHS database scheme could result in billions of pounds being saved. It is doubtful if the increasingly incompetent Alistair Darling has either the courage or the authority to take such action.
- Stephanie Williams, London
So its temporary....10 years to go then.who voted these muppets into no 10?
- Fly, london
Brown should forget the election and do what is right for the country. He is a master of the clever tactic, but useless at longterm strategy.
- Alex C, London
Dizzy Darling would not qualify for "duty" in looking after the local public conveniences.
Ill-thought, ill-judged, hastily scribbled panic solutions by those wombles in the Treasury are the order of the day.
Yesterday the 50% would be levied on the rich.
Today, Dizzy Darling has changed his mind - after he realised that 645 MP's all get over £150,000 per annum and it would mean that MP's would have to snaffle more cash from the "expenses" trough in the House of Conmen to make up the shortfall.
Talking of expenses - where did that headline of two days ago vanish to? The one where Gormless Brown stated he was going to abolish the Second Home Allowance?
PIGS MIGHT FLY.
This lousy Labour Government have been well-and-truly sussed out by Joe Public - is that WHY 8,000 peeps EVERY WEEK are packing their bags and clearing off abroad to a more civilised country for the rest of their lives?
- Reuben Camara, Morecambe/Lancaster
If the 50% rate is bad (actually 51.5% incluidng the National Insurance), what about the 60% rate (61.5% including NIC) which now applies if you're earning £100,000!!! (This is the effect of withdrawing personal allowances between £100k and £113k) One pound for you and two for me, to missquote a certain song.
- Tax Geek, London
