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Labour would bring back 50p tax rate Labour would bring back 50p tax rate
(35 minutes later)
A Labour government would reintroduce the 50p top rate of income tax for those earning over £150,000, shadow chancellor Ed Balls has said. Labour would reintroduce the 50p top rate of income tax for those earning over £150,000, if it returns to power.
He said a government analysis which showed it did not raise much was skewed by assumptions made by ministers. Shadow chancellor Ed Balls said a government analysis which showed it did not raise much was skewed by assumptions made by ministers.
The last Labour government raised the upper tax band from 40% to 50% in 2010 in response to the recession but the coalition has since cut it to 45%.The last Labour government raised the upper tax band from 40% to 50% in 2010 in response to the recession but the coalition has since cut it to 45%.
Tories say the wealthiest are already paying more income tax than ever.Tories say the wealthiest are already paying more income tax than ever.
Mr Balls said latest figures from HM Revenue and Customs showed those earning over £150,000 paid "almost £10bn more in tax" in the three years when the 50p top rate of tax was in place than when it was cut in 2012.
'Unfair tax cut''Unfair tax cut'
Speaking to the Fabian Society in central London, Mr Balls said: "The latest figures show that those earning over £150,000 paid almost £10bn more in tax in the three years when the 50p top rate of tax was in place than when the government conducted its assessment of the tax back in 2012. Speaking to the Fabian Society in central London, he said: "When the deficit is still high, it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut."
"And when the deficit is still high... it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut."
He went on to say the next Labour government wanted to finish the job of getting the deficit down by "reversing this unfair tax cut for the richest 1% of people in the country".He went on to say the next Labour government wanted to finish the job of getting the deficit down by "reversing this unfair tax cut for the richest 1% of people in the country".
A potential return to the 50p top rate was welcomed by unions. Conservative Treasury minister David Gauke said he stood by the figures produced in HMRC analysis which showed the 50p rate would "raise little, if anything".
Unite called it a sign that a future Labour government "understands the need for a fairer taxation system". He added: "Under this government, the wealthiest are paying a greater share of income tax than they ever have before and we are bringing in a whole host of measures to ensure that the wealthiest pay the most.
A spokesman said: "This is a beginning. Voters will know now Labour is emerging as a positive choice for this country. "If Labour want to deliver a reduced deficit, given their opposition to any of the spending cuts we're putting in place, then I'm afraid they're just going to have to put up taxes on everyone - not just the top earners."
"Contrast this move with the complacency of the government, which instead of finding ways to get money into people's pockets, insists to cash-strapped workers everything is rosy."
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Labour has previously pledged to reintroduce the 10p lower tax band, funded by a "mansion tax" on £2m properties.Labour has previously pledged to reintroduce the 10p lower tax band, funded by a "mansion tax" on £2m properties.
The removal of the 10p tax band by Gordon Brown in the 2007 Budget also saw the basic rate of tax reduced from 22p to 20p.The removal of the 10p tax band by Gordon Brown in the 2007 Budget also saw the basic rate of tax reduced from 22p to 20p.
Other Labour pledges Mr Balls highlighted in his speech included:Other Labour pledges Mr Balls highlighted in his speech included:
He also announced a Labour government would balance the books and deliver a budget surplus.He also announced a Labour government would balance the books and deliver a budget surplus.
His party would pass a law to ensure it adheres to "tough" and binding fiscal rules, he said.His party would pass a law to ensure it adheres to "tough" and binding fiscal rules, he said.
This would mean eliminating the deficit - so the government generates more cash than it spends - and cutting debt as a share of GDP between 2015 and 2020.This would mean eliminating the deficit - so the government generates more cash than it spends - and cutting debt as a share of GDP between 2015 and 2020.
Labour's commitment does not include borrowing extra money for long-term investments, such as the high speed rail link.Labour's commitment does not include borrowing extra money for long-term investments, such as the high speed rail link.
Conservative Treasury minister David Gauke said he stood by the figures produced in HMRC analysis which showed the 50p rate would "raise little, if anything". A potential return to the 50p top rate was welcomed by unions.
He added: "Under this government, the wealthiest are paying a greater share of income tax than they ever have before and we are bringing in a whole host of measures to ensure that the wealthiest pay the most. Unite called it a sign that a future Labour government "understands the need for a fairer taxation system".
"If Labour want to deliver a reduced deficit, given their opposition to any of the spending cuts we're putting in place, then I'm afraid they're just going to have to put up taxes on everyone - not just the top earners." A spokesman said: "This is a beginning. Voters will know now Labour is emerging as a positive choice for this country.
"Contrast this move with the complacency of the government, which instead of finding ways to get money into people's pockets, insists to cash-strapped workers everything is rosy."
Katja Hall, of the CBI business group, warned that a 50p tax rate would put talented people off coming to the UK to invest and create jobs.Katja Hall, of the CBI business group, warned that a 50p tax rate would put talented people off coming to the UK to invest and create jobs.
Simon Walker, of the Institute of Directors, said Labour needed to drop its practice of "knee-jerk reversion to the old Socialist nostrums that so damaged Britain's economy in the past".Simon Walker, of the Institute of Directors, said Labour needed to drop its practice of "knee-jerk reversion to the old Socialist nostrums that so damaged Britain's economy in the past".
"It was, and remains, an envy-driven political gesture designed solely to drive a wedge between voters," he added."It was, and remains, an envy-driven political gesture designed solely to drive a wedge between voters," he added.
Chancellor George Osborne has set the Conservatives the slightly more ambitious target of an absolute budget surplus by 2020, which means generating more in revenues, including tax yields, than the entire expenditure.Chancellor George Osborne has set the Conservatives the slightly more ambitious target of an absolute budget surplus by 2020, which means generating more in revenues, including tax yields, than the entire expenditure.
The last time the government ran an absolute budget surplus was in 2001.The last time the government ran an absolute budget surplus was in 2001.