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How the Conservatives should respond to Ed Balls’ 50p tax pledge

27 January 2014

27 January 2014

This weekend Ed Balls made it clear he wants to tax Britain more.It won’t stop at 50%, and it wont be confined to the highest earners over 150,000. In that sense low tax Comservatives have much to thank Ed Balls for as he really has set out clear blue water between Labour and the Conservatives for the next election.

Nevertheless, let’s not celebrate too quickly. Labour will know, and as Ed Balls all but acknowledged on the Marr show this weekend, that this tax commitment is little to do with economic policy and more to do with their own electoral strategy. A 50% top rate of income tax will raise little extra money if any at all. The HMRC calculates that at best 100 million, at worse it produced a negative effect on tax receipts. So why do it?

Simple.

Labour only need 35% share of the popular vote to win a majority, and appealing to a left wing sense of perverse morality by fleecing the high earners is a pretty good way to shore that vote up. Throw in some ‘posh boy’ narrative and a promise to be ‘fair’ should neatly seal the deal.

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The two Eds have lost the argument on the economy as they relied on their own forecasts of ever increasing unemployment and zero growth to catapult them back into Downing Street, and it now looks credible that economic growth may will translate into a  positive noticeable impact on households thereby undermining Labour’s  more recent cost of living campaigns.

But dealing with the politics of envy that underlines the 50% tax rate promise may prove a difficult challenge for the Conservatives to deal with. In fact I believe many people will ultimately reject Labour’s approach, yet the danger remains because only a small proportion of the public, 6% of them to be precise, need to agree with it, in order for Labour to increase their share of the vote from 2010’s 29% to a majority winning 35%

The Conservatives counter attack should however be to appeal to the mainstream aspirational voter and not fret too much about the politics advocated by Balls and Milliband. Since in reality much of the remainder of this parliament will be focussing on setting out policies for a new Conservative government surely it’s time to make both the moral and the economic case for lower taxation.

And where better to start than with the middle income earners who are instinctively striving to improve their lot and yet bearing a considerable price for the failed debt ridden policies of the last Labour government. What better means to do that than to make it clear we want to increase the threshold where employees pay 40% tax. Let’s face it: paying 40 pence to the government of every pound earned over the present threshold £41,450 is at best demoralising at worst de-motivating and kills ambition and aspiration.

This tax rate when conceived was for the relatively well off. Yet my constituents who do earn that sum of £41,450 are far from ‘well off’. Mortgage or rent, season ticket, council tax, household bills, car, insurance leave little for luxuries one would normally have associated with the well off. Indeed the net income after tax and National Insurance is £30,000: just £4,000 above the household welfare cap of £26,000 a year.

There will be those that believe it is fairer to take more of out tax altogether as we have done by increasing the threshold before paying tax to £10,000 a year. I agree this was a welcome sound move. Yet little political benefit has subsequently materialised and it says little about aspiration and reward for those that want to get on. It’s time to shape that argument about how Conservatives will do just that.

Let’s leave envy to Labour’s message and keep aspiration coming from the Conservatives.


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Show comments
  • Iain Herd

    Raising the allowance is pretty difficult to market compared to “50p tax rate for the rich”.

    Now that a large percent of the voting public are caught in the 40p bracket – the most obvious and marketable solution is to match Labour and reduce this to 35p. To be paid for by additional cuts.

    The gap between the middle earner and the “rich” will be 10p as proposed by Labour – but voters get a clear choice on how to achieve this cut or spend.

    I know which way I’d vote!

  • Simon Nicholls

    Chase the avoiders who should be paying at 45%, not tax the socially conscious who pay at 45% like the are asked to.

    Total contribution to taxes amongst the top 1% of earners has gone from 24.4% to 29.8% since 2008, the highest increase of any group of tax payers. For the bottom half of earners their overall contribution to tax has dropped from 10.4% to 9.7%. So the top 1% now contribute 3 times more than than the bottom half of earners.

    More here and links to sources… https://medium.com/p/ef8d906a827d

  • CaptainDallas

    “A 50% top rate of income tax will raise little extra money if any at all.” I stopped reading after this piece turned into a Tory party political broadcast.

    How can you seriously promote this view when we have a government that cuts benefits to motivate the poor to work, yet reduces tax for the very wealthiest for the same ends?

    Why not reduce the 40% rate? Why not the basic rate? Because they raise revenue perhaps? But you expect us to believe that suddenly a tax is ineffective if you happen to be one of Cameron’s or Osborne’s chums? Errant nonsense.

    • Dogzzz

      Except that the laffer curve supports it. as does all the evidence. Look at the last three years. The top rate of tax collected in each of these years the following:

      Year 1: 50% rate = 41 billions
      Year 1: 50% rate = 41 billions
      Year 1: 45% rate = 49 billions

      Increasing the top rate of tax will result in those on and approaching that band, to change their direct taxable income so that LESS revenue is generated. You may not like that fact, but it is true.

      Why do you want to raise less revenue from the wealthy? Do you support labour’s other tax policy of taxing the poorest workers (who currently pay no income tax) to make up that expected shortfall?

      • CaptainDallas

        I simply do not believe those numbers – data designed to favour a Tory policy. In the same way that I didn’t believe children were getting better schooling based on Labour’s exam statistics.

        How come when it came to removing child benefit, the Tories were full of ‘those with the broadest shoulders must bear the most responsibility’ clichés, but when it comes to taxing the very wealthiest, they are suddenly of the opinion that ‘they won’t pay it anyway, why bother’? Stunning hypocrisy.

        Your argument is flawed as the Tories are hurting the very poorest regardless, including the disabled, so please don’t say that introducing a higher tax bracket will mean the poor suffer. They already are.

        I’ll quote Austan Goolsbee to conclude, as he puts it far more succinctly that I can: ‘Moon landing was real. Evolution exists. Tax cuts lose revenue. The reasearch has shown this a thousand times. Enough already.’

  • SonofBoudica

    It is about time that eligibility to vote was restricted to those who make a net contribution to the Exchequer, after deducting all benefits and money received from the taxpayer (including public sector salaries). Those who don’t pay should have no say.

    • Dogzzz

      No representation without taxation. Good idea.

  • http://www.biologymad.com/ HD2

    Cut rate to 30p
    Raise threshold to £50k
    Withdraw ALL ‘free’ access to State services (NHS, Education, Pensions) for those in this category.

    Repeat, in 2020, for all those paying Income Tax – which means the Personal Allowance can be raised to £27,000 (median earnings).

    We then have a population which pays little tax on earned income, BUT pays its own way, in terms of the services it uses.

    The taxpayer then funds the cost of ONLY those who cannot earn enough to pay Income Tax – namely the unemployed, unemployable, disabled, sick – and pensioners.

    Oh – and I’d raise the size of the State pension to min wage levels (£13k pa) and also the age at which it is paid – to 85 by 2020 and 95 by 2040.

    A generous pension for a few years, not a niggardly pension for 30+ years should be the aim – just as it was in 1906 (age 70) and 1945 (age 60/65, equivalent to 88 today).

    The idea that we all pay in and all get out is as insane as it is possible to imagine and merely serves to employ people pointlessly whilst destroying their spirit, self-reliance and family values.

    ‘Socialism is shared misery’ as has been said many times.

  • AB

    I hope Osborne takes the opportunity to get rid of the appalling stealth tax that is the withdrawal of the personal allowance from £100k while he’s at it. That said, it makes taking a month’s unpaid leave a year very appealing for those who are earning up to £120k.

  • Hugh

    Fewer than 15% of workers pay the 40% rate – and even fewer wil be swing voters. It makes much more sense to continue to concentrate on raising the starting rate, both politically and economically.

    • Alexsandr

      no, its more important to increase the tax take. Then you can increase personal allowance and hopefully raise the 40% threshold.

      • Hugh

        I’m not sure I understand your point and how exactly it relates to mine. The author is suggesting that politically it makes sense to raise the 40% threshold so fewer people pay it. I’d suggest that – if you are looking to mess around with tax thresholds – raising the lower threshold is likely to give you more votes (and I suspect for less cost to the Treasury). Which part do you disagree with?

  • http://english-pensioner.blogspot.co.uk/ english_pensioner

    As every indication is that increasing the tax rate will reduce the tax take, the Tories should be pointing out that the money has to come from somewhere, and that it is likely to come from the poorer who would otherwise see tax thresholds increased.

    • Dogzzz

      The tories should be showing how labour will fail to raise any revenue increase whatsoever from the envy based bash the rich 50% tax rate, and therefore show how labour will force the tax burden onto the poorest.

      Gordon Brown introduced a 10% rate and dragged many of the poorest into tax at the bottom rate. Then he doubled that rate to 20%. These poorest workers, who labour taxed at 20%, are now paying no income tax whatsoever due to the coalition increasing the tax allowance threshold.

      Labour have pledged to reintroduce the 10% rate for the poorest workers.

      The tories need to show queues of people down at the foodbanks, being told that labour believes that they are still wealthy enough to have 10% of their paltry incomes taken to subsidise the failure of the 50% rate to raise any additional revenue.

  • John Moss

    20% above £10k and 40% above £100k ought to be a Tory aspiration.

  • HJ777

    I think the argument here is wrong.

    Given limited scope for tax cuts because of the state of the public finances, the priority should be to continue raising the personal tax allowance towards the level someone would earn in a full time job on the minimum wage. Provided the higher rate threshold isn’t reduced, then people over the higher rate threshold would also benefit.

    The reason is that the amount raised in income tax by those on the minimum wage is very small as a percentage of overall income tax but it would make a big difference and provide a big incentive to work for poorer people and those who are unemployed but can only (to start with, at least) aspire to low paid work.

    And if the motivation is political (as unfortunately is a factor) rather than just moral, it would also gain support for the Conservatives from the people whose support they need to attract (the low paid), rather than those who already support them.

  • Fergus Pickering

    The Conservatives will win if the economy continues to improve. Ed Balls is a wonderful gift to reactionaries everywhere. Praise be!

  • BarkingAtTreehuggers

    How to respond? Easy.
    By taxing the asset bubble.
    D’oh.
    Double Council Tax due for all homes over a million quid to get the ball rolling.

    • Alexsandr

      oh great -another tax. Why cant they just cut spending to match their income?

      • BarkingAtTreehuggers

        Are you advocating the complete cancellation of all bonuses in publicly-held financial institutions?

        • Alexsandr

          eh? I was just saying we need to get out of the mindset, ‘the government is short of money, lets find someone to tax’ and get to ‘the government is short of money, lets cut spending’

          • BarkingAtTreehuggers

            Exactly. 100% of my reply to you expanded on that point.

      • Mynydd

        Mr Cameron/Osborne have tried cutting spending and have failed

        • Alexsandr

          I can sympathise a little. The last shambles left a load of debt interest and PFI payments that cant be avoided.
          but the own goal of the ring fences is wrong. all depts. should have taken their part in the cuts.

        • HJ777

          Their plan always proposed tackling the deficit by initially raising taxes whilst constraining (but not actually reducing) spending, followed by a period of reducing spending – a period which we have only recently entered.

          I think they got it the wrong way around, but that was their plan.

          I though that Labour’s complaint was that they cut too hard and too fast?

  • david trant

    Tories never tell lies on taxation. ‘We have no intention of increasing or extending VAT. General election 1992.

    But the
    United Kingdom must demonstrate that it will do more than just offer assistance to
    others. We have to show that we are prepared to act here at home. For every single
    country the environmental buck stops in their own back yard, nowhere else, and that
    means governments around the world need to act, even when that means taking difficult
    and unpopular measures. And that was why we announced decisive action in the budget
    in the United Kingdom last week. The Chancellor announced that there would be long-term
    rises in the real level of road fuel duties and that Value Added Tax would be extended
    to the domestic use of fuel and of power. And in so doing he underlined Britain’s
    determination to meet our Rio commitments on Carbon Dioxide emissions. It makes no
    sense for the government to commit Britain to lower CO2 emissions but at the same
    time to be the only Western European government with no Value Added Tax on domestic
    fuel. It was, frankly, a text book case of perverse signals. Nor did it make any
    sense for the government to exhort motorists and manufacturers to choose and build
    fuel efficient cars while refusing to give them tangible incentives to make and to
    buy those cars.

    John Major justifying the increase and extension of VAT onto domestic fuel. March 1993.

    If the Tories win a majority in 2105, sure as eggs is eggs they’ll increase VAT to 22.5% or even 25%.

    • HookesLaw

      Thats why its so tough being a polititian. You say what you want to do and then a Rio Summit comes along.

  • Tony_E

    I think there is a plain fact here, and it’s that people don’t intentionally take poor tax decisions for themselves.

    For example – if an inventor was to patent an idea which then took the fancy of a large corporate for say £1 Million – he would be unwise to sell it in one go. Much better for him to licence it across 10 years with the patent transferring full ownership at the end of the deal.

    And whatever ways you try to tax one off ‘good years’ as businesses and individuals often have, accountants will find good ways of avoiding penal rates of tax, including taking businesses offshore to more conducive tax regimes.

    And therein lies the rub, if you are part of a free trade area in which there is tax competition, then it is very difficult to levy penal rates of tax, and very advantageous to be tax competitive.

  • David Kay

    The Conservatives should respond to Ed Balls 50p tax pledge by saying “vote UKIP”

    • RavenRandom

      Yep and get Labour. Don’t kid yourself, your economic interest (unless you can change the voting system to one where your vote counts), is to vote Conservative.

      • David Kay

        it makes no difference to me whether we have a Labour or Conservative Government. They’re just different cheeks of the same @rse. Vote LibLabCon get socialism

        • RavenRandom

          I don’t think that’s true. I think the current emerging economically illiterate, divisive class war Labour will harm us all, their own votes included ultimately.

          • David Kay

            what you say is true. Its equally true of the Conservative leadership

            • RavenRandom

              It manifestly isn’t. They are not as right wing as you might like (partly because they’re in coalition) but they’re certainly not as left wing as Labour.
              Blind faith in UKIP will get you a return to the 70S.

              • David Kay

                Blind faith in the Conservatives will return you to the 70s. it is Tory policy to double fuel bills by 2020 which will lead to the black outs of the 1970s. 24,000 died last winter (google it) because they couldnt afford to heat their homes. Thats mass murder to me, and its Tory socialism in action by supporting the Climate Change Act

                The Conservative Party is like a genetically modified water melon. Blue on the outside, red on the inside

                • Alexsandr

                  more importantly, they are cutting generating capacity, so even those who can afford electricity many not have it 24/7 in the winter.

                • David Kay

                  One cant help but think Cameron is trying to kill off the indigenous population and replace us with immigrants from the 3rd world. Now i know what he meant when he said Britons should adopt the muslim way of life, not the other way round

                • Holly

                  The imported population boom under the last lot was ‘grumbled’ at by those most affected, but I saw no rush, or hurry by the indigenous Brits to shift Labour at the ballot box.

                  Michael Howard warned us what was happening in 2005, but we were all far too busy spending imaginary money, and those most affected were given ever increasing handouts to stay quiet on the scrap heap, while foreigners got the jobs.

                  It wasn’t until the financial mess came to light, that folks lifted their heads out of the sand, and REALLY started grumbling.
                  Resulting in Labour having their worst result in 2010.

                • David Kay

                  My problem with Cameron is that i see him as a loony lefty. This is what Patricia Hewitt said as to why Labour were losing elections prior to ’97. It is equally applicable to todays Conservative Party

                  “It is obvious from our own polling, as well as from the doorstep, that the “London effect” is now very noticeable. The “Loony Labour Left” is now taking its toll; the gays and lesbians issue is costing us dear amongst the pensioners and fear of extremism and higher taxes/rates is particularly prominent”

                  sound familiar?

                • HookesLaw

                  BBC archives point out that in 2005 29000 people died in winter in 2006 23000 died yet average temps were only 4degC
                  The man with a moral compass was in charge then. Is he a mass murderer.
                  The fact is 24000 did not die because they could not heat their homes. the govt provide winter fuel payments.
                  Old people have to die some time some where and its not because they cannot heat their homes.
                  Very cold places have a lower death toll in winter. Portugal has a higher death toll.
                  BBC archives point out that outside cold is dangerous and people are simply not prepared enough. Waiting for a delayed bus is a killer the report says.

                  Far better people than you have studied the subject.
                  http://www.nbcnews.com/health/heart-attacks-more-deadly-winter-its-not-cold-1C6895167

                  http://articles.mercola.com/sites/articles/archive/2010/09/11/why-your-heart-attack-risk-may-increase-this-winter.aspx
                  ‘Although many experts believe that colder temperatures cause heart attacks, if temperature is the sole factor then people who live at higher altitudes,where it is generally colder, should be more likely to die from heart attacks as well.
                  However, according to Dr. John Cannell, founder of the Vitamin D Council, Greek researchers found that people living at higher altitudes are actually less likely to die from heart disease.’

                • David Kay

                  i like the way you rely on the BBC to support your argument. The BBC being full of socialists, being used by a socialist Conservative. Thanks for proving my point about the Conservatives being full of socialists

                • HookesLaw

                  The BBC quote scientists. As do NBC.
                  Since deaths were far higher under the years of socialists – its all clearly not a plot by heartless conservatives but a sad fact of life.
                  Pardon me but you are an idiot.

                • David Kay

                  yes the BBC quote scientists. I hear them all the time regarding climate change. They use the science of climate change to get the socialist message across. Science and scientists should hang their head in shame

                  And more died under the Labour socialists than the Tory Socialists. Well thats like saying the national socialists weren’t as bad as the soviet socialists as they didnt kill as many people.

                  The message is clear, socialism kills, and the heir to blair is doing his part

                • HookesLaw

                  This has nothing to do with climate change. Your rant is degenerating – everyone who does not agree with you is a socialist.
                  Old people die and more die in winter in temperate countries. Studies show its more complicated than simply lack of heating at home. And in any case the govt provise a heating allowance.
                  Your slur is based on ignorance.

                • David Kay

                  youre ranting worse than michael foot on acid and trying to make excuses for the deaths of tens of thousands of people who died because of the Climate Change Act who froze to death. What an classic example of Compassionate Conservatism being an oxymoron.

                • RavenRandom

                  It’s not blind faith, it’s a realistic chance of not getting Labour. Whereas supporting UKIP actually increases the chance of getting Labour. There are many Conservative polices that I wish were somewhat different, they are for me the least bad option. Whereas voting UKIP increases the chances of the worst possible outcome. Further the more I see of UKIP politicians who are not Farage the worse they look. They are not a panacea.

                • Dogzzz

                  “it’s a realistic chance of not getting Labour. Whereas supporting UKIP actually increases the chance of getting Labour.”

                  So in order to avoid a labour government which is high tax, high spend, high borrow, pro Eu, pro unlimited immigration, pro politically correct social division, pro climate alarm and who are wrong on almost all of the important issues of our times, I should vote for a conservative party which is igh tax, high spend, high borrow, pro Eu, pro unlimited immigration, pro
                  politically correct social division, pro climate alarm and who are
                  wrong on almost all of the important issues of our times….

                  Who should I vote for if I hate any party which is high tax, high spend, high borrow, pro Eu, pro unlimited immigration,
                  pro politically correct social division, pro climate alarm and who are
                  wrong on almost all of the important issues of our times?

                • RavenRandom

                  I don’t know, the Non-existent Fantasy Party?

                • Dogzzz

                  Just as I thought…. A completely delusional and unhelpful suggestion by a desperate tory.

                  I shall vote FOR the policies I want. At least when I leave the polling booth, I will have the satisfaction of knowing that I will have voted against the awful policies of labour, conservative and liberal democrat alike. I cannot be blamed for the mess that desparate liblabcon voters will have implemented. I know many others who will also be taking votes away from Labour, to vote UKIP. I shall be joining them in voting UKIP too, because I cannot vote for more of the same lefty establishment rubbish that we have been battered with for the last 17 years

                  UKIP a real party. I shall be voting for common sense not common purpose.

                • RavenRandom

                  UKIP is one man. Vote for them and own the consequences.

                • Dogzzz

                  Better one man for this country, than a cabinet full of traitors working against us.

              • Holly

                Just let them get on with it.
                When we do end up in yet another Labour mire, maybe then they will recognise just how unfit Labour are, and how completely different they are from the Conservatives.

  • Roderick

    For all their apparent economic illiteracy, when they were in office Brown and Balls played a cunning game with income tax rates and tax credits. By ensuring that the majority of the lower-paid not only paid income tax but were also ‘given’ tax credits, they created supplicants. The Government could then tweak these rates and credits as they liked, claiming to the gullible: “See, Big Brother loves you. He is giving you more money”. (A cursory analysis shows the underlying reality of confiscation and partial rebate, but the message of giving carries a powerful emotional charge.)

    The plan was that everyone should receive some sort of ‘credit’ from the Government – winter heating allowances for millionaires being one of the more grotesque examples – so that the entire nation would become a client state, the basic socialist/communist objective.

    Although it is undoubtedly more rational and efficient for the Coalition to reduce the tax burden on the lower-paid by taking them out of tax altogether, by doing so the Government loses the levers of (fake) compassion and runs the risk of being seen to have ábandoned’ these people. Tax credits are a political calculation of Machiavellian proportions.

    • Tony_E

      High taxes are generally very popular with people who don’t pay them, just as welfare is very popular with people who receive it and less so with those who never do.

      Brown’s answer was to extend welfare to as many as possible as you describe. But a better way to create support for welfare in middle England is to make it contributory, while keeping tax rates themselves reasonable low so that people see themselves as paying in a fair share and perceive less opportunity for abuse of the system at their expense.

      • Andy

        That’s why a Flat Tax is a good idea. It is immoral to vote for something you yourself will never pay, so higher rate taxes are bassically immoral. A single flat rate is fair and just.

        • Tony_E

          I think that’s a fair argument. The only thing I would say is that below a certain level of income you would still probably have to have a 0% band, otherwise the rate would be unduly punishing on the lowest earners. They would also pay other taxes from which they could not escape (indirect taxes).

          So there would always have to be a small democratic deficit in the tax system there.

          Also, you would have to decide whether the rate was initially designed to collect the same level of income tax as was previously the case – possibly leaving people currently just below the 40% rate worse off in tax terms. Those people should be a part of the Tories main target vote, it would be interesting to see how the policy could be sold to that group.

    • Dogzzz

      They also used it as a massive tracking and control programme. If you worked, they taxed your income too much and then required that you fill in very intrusive forms to give them all your most private financial information (which is none of their damned business) in order to claim some of your own hard earned money back.

      They have the desire to own and controll everyone. They stand against freedom and for state imposed tyranny. They are sick in the head.

      It is far more efficient, effective and ethical to simply not tax the poorest at all. To leave them alone and let them get on with their own lives, self sufficient and capable. Not trapped endlessly in state dependency to rot.

  • Andy

    If I was Osborne I would leave a load of unexploded bombs in the tax system for Labour. How about bring in a Flat Tax to start in 2016. That would be fun.

    • Tony_E

      The biggest bomb still out there is the sheer level of consumer credit. And it will go off if there is even the slightest rise in interest rates.

      Most banks have substantial mortgage books that pre-date 2008 and are full of toxic rubbish – low variable rates have saved them from implosion (the lesson of the 92 recession learned from a political standpoint).

      Add to that the outstanding debt of the average consumer in the UK, and the ‘twofers’ (mortgage holders with other unsecured debts that they only afford because their mortgage rates are so low), then a rise in interest rates could scuttle the entire system.

      Balls will have his hands full with or without much help from Osborne

      • Alexsandr

        but without some correction in interest rates to more ‘normal levels’ then many savers will be in trouble. Many older people are having to spend capital because the return they get is so miserly.
        there again the banks spread doesn’t help.

    • Fergus Pickering

      No good. Because Osborne is going to win.

    • Colonel Mustard

      He couldn’t do it because he has “an opposition in government” in the shape of the Lib Dems – or to use the technical term for that party, which is neither liberal nor democratic, Labour-Lite.

      Miliband’s East German socialism – advocates and clients – is running at about 35% but their domination of the narrative is about 99%. Until the left in Britain have their over-represented, disproportionately vociferous wings clipped good and hard and a cohesive conservative narrative is presented, preferably without the BBC, this travesty of Lies prevailing over Truth will continue.

  • DavidL

    The cat’s out of the bag. Rather than make what they used to refer to as “tough choices” the current invertebrate Labour leadership will try to close the deficit by taxing up to the level of their own extravagance. If they get re-elected we’ll be going back to the IMF, as we did under a previous Labour (mal) administration.

    • HookesLaw

      (Mal)administration… Good one

    • david trant

      The decision to go the the IMF was taken because the PSBR prediction was grossly overestimated, in fact only half the loan was taken up, (needlessly) and all repaid within two years. Not that I’m defending the Labour governments handling of the economy you understand.

      Would you like to discuss, why Tory governments (plus the Coalition) always put up VAT after denying they will, perhaps the ERM disaster as well?

      • Tony_E

        VAT: It’s an easy tax to hide on small purchases, which always raise the most money for exchequer because there are so many of them. Big budget items generally tend to hit those with money to spend so although it is a regressive tax in many ways, the belief is that the biggest effect is felt in the middle and top. The fall down of this is that if you live in a rural area, VAT on car repairs, fuel and other transport costs can be crippling, and so is potentially more painful for the rural working poor than the urban working poor.

        The ERM was seen (mistakenly) as a way induce fiscal discipline and control inflation (which was staring to pick up again under the Lawson boom). Of course it was nothing of the sort, it was just a pretence built on the old ‘Snake’ which countless times was ‘band revalued’ to suit the old European powers. Both sides of the house were very much in favour of the ERM. Thatcher was however, very sceptical and only finally agreed to it when she was in a weakened position over sir Alan Walters after the loss of her Chancellor (Lawson). Walters had constantly advised against it, creating tension between PM and Chancellor.
        We entered at the wrong price, gave the markets an easy angle to chip away at and should never have entered at all. The ERM was always an invitation to speculators, especially with the narrow band entrants.

        • david trant

          Really so that’s an answer is it, or a justification, and the doubling of interest rates in one day, a bit of a wheeze?

          • Tony_E

            I agree that it was a terrible mistake to try to defend the ERM in that last day or two. The pound was way too high in comparison to our real economic position, so that was completely untenable. Markets always attack the weak or the unrealistic. It is also true that of the major players in the decision making process to enter it, only Thatcher and a few others were against, and were a minority in a cabinet that was not particularly united behind its leader. That was the political reality of the time.

            But you have to bear in mind at the point of entry, there was no disagreement between the parties, it was largely an accepted truth that the ERM would put sensible restraints on UK economic policy. That the majority were wrong is now a matter of record. Walters was largely isolated in his views, and Thatcher’s reliance on him had destroyed the relationship between her and Lawson.

            • Colonel Mustard

              I admire your patient and objective responses to the provocative heckling of Labour trolls here. They will never be convinced by such equivocation though as they inhabit a world of polarised extremes and are not here to debate but to peddle propaganda and disrupt.

            • Dogzzz

              Very true, so few of the political leaders (of both parties) at the time were aware of the obvious economic weakness, and risk of entering the ERM with an economic cycle completely out of sync with our other European Community partners (as it was at that time). Labour were far more enthusiastic to join the ERM than the tories, as they did not retain the patriotic resistance to losing our currency, that many tories had.

              Any attempt to artificially maintain the value of Sterling above the value that the Markets had decided it was worth, was always going to be a disaster and it caused an entirely needless recession as interest rates were the only, blunt and innefective tool used for such a purpose. It was an entirely political reason to act against the Markets to achieve a European political dream and it spectacularly failed.

              Once we were free of the ERM, the tories resumed their economic policies based on what was best for this country, albeit with one eye cocked on meeting single currency criteria, (unlike Greece).

              This lead to the very strong recovery and the accumulation of economic security so strong that it took the incompetence of labour 9 years to finally wreck it. (1999 (when they abandoned the tories spending disciplne) – 2008)

              Now we have labour party eager to repeat the mistakes of the past and wreck our economy once more through the myopic implementation of an economic policy borne of political envy, sheer naked spite and rank economic ignorance. If only they can pursuade 35% of the voters that this is the right thing to do.

              The sad part is, that thanks to the torie’s current ineptitude at PR it looks very much like labour will get away with it again.

              For a party led by a man whose critics accuse him of being a “PR” man, his PR is abysmal. Letting labour and the BBC get away with the “bedroom tax” lies; Savage cuts lies and even somehow being seen as taking the blame for all the hacking that went on in labour supporting newspapers, under a labour government, when a labour supporting Met Police was turning a corrupt, blind eye to it all. The Leveson inquiry SHOULD have dumped a massive bucketful of bovine excrement over labour and buried them in it, for the Campbell clique in the labour party were up to their necks in it.

              I weep for the future with parties like the current crop of liblabcon idiots in, and vying for, power. I really do.

        • Mynydd

          Are you saying Mrs Thatcher had lost control of her cabinet?

          • Colonel Mustard

            No, he didn’t say that but you are implying it. Which, if it is the only thing you draw attention to from the above comment, tells us all we know to know about you and your motives for trolling here.

          • Nicholas chuzzlewit

            No. You, a mindless Labour troll are doing that.

          • Nicholas chuzzlewit

            You mean like that moron Gordon Brown.

        • Andy

          The ERM, just like the Euro, was always a nonsense and did not work. Read Bernard Connolly’s book ‘The Rotten Heart of Europe’. He explains perfectly why it didn’t work and why the Euro has been such a disaster.

      • HookesLaw

        The liberals proposed tax increases as part of their plans in 2010. in case you missed it the operative word is ‘coalition’

      • Holly

        If you are complaining about 20% VAT, on VAT atracting goods you are not FORCED to buy, and you find it justified, why aren’t the top earners allowed to complain about a 50% FORCED tax grab on their income?
        You at least do have a choice.
        Labour believe in making EVERYONE financially worse off, instead of lifting those on low/middle incomes, so they can be more financially secure, and independent of the state for their income, they lower the income of those at the top, who fund the one’s at the bottom, thus leaving everyone worse off/with less.

    • david trant

      I should also add, that cabinet papers recently released showed, that the Heath government was considering going to the IMF before it fell.

    • Holly

      Who is surprised that Labour’s two Ed’s have gone into default mode?
      Taken the usual, dull, lazy cop out route, with policies Labour have tried over & over again, only to end up with the same miserable result that we end up paying for?

      As sure as night follows day, Labour under these two fools, will be no different than under previous Labour fools.

      They are truly the party who are unfit to govern.

  • anyfool

    Maybe if you lot tried to explain to people, you can only take money of the very well off once, next year they are not well off because the tax taken from their pay will not be replaced by the employer, they will then go on to pay an accountant to reduce their tax bill to zero, they will do this because the accountants bill will be less than the tax bill.
    They will then have to go for the not so well off to replace the lost revenue, that means you because you are piggy in the middle, no where to go, not earning enough to be able to pay for a shark to cut you out of the loop.
    Then its the poor, remember the cutting of the 10% tax they doubled, do you really think it was a mistake by Brown, the supposed tax master general.

    • Dogzzz

      The biggest lie of the last government was the “scrapping” of the 10p band. If they had scrapped it, then those poorest workers who were only paying tax at that rate, would have not been paying any tax at all on their very low income.

      Can you imagine if the tories “scrapped” a tax rate that left the poorest paying DOUBLE the previous rate? The BBC would be in a permanent state of fury and rage.

      Let’s tell it how it actually was. Labour doubled the income taxes of the poorest workers, all whilst they were bailing out and knighting corrupt, unqualified bankers.

  • Kitty MLB

    My I make a point that if we had a Conservative government instead
    of this hybrid hodgepodge of delusional Leftie Lib Dems and camservatives
    then from the very beginning of the current parliament we would have reduced
    the tax to the far more economically productive 40%- because envy, division
    and attacking those who provide wealth , and support for public services
    does not benefit a country- like it or not the poor need the rich, and the rich are able to move on to another country- just ask France about that one!
    A determined and efficient and experienced Conservative government ,
    knows how to make the right decisions for the long term, instead of all this furrowed
    brow nonsence. decisive action from the beginning.
    A lost opportunity against a ruthless, dangerous, unpatriotic , deluded , deceitful
    and manipulative Labour party and Leftie establishment-
    who utterly deplore this country and especially their own voters as everything they ever did had a detrimental effect especially on those who are foolish enough to vote Labour.
    All the camservatives can hope for is that everyone remembers that Balls started the fire and hope that Milipede does not get rid of him.

    • Mynydd

      Why blame the Lib Dems when it was Mr Cameron failure to win an overall majority at the 2010 election that led to the present arrangement. If Mr Cameron had the bottle he would have formed a minority government, then defied the other party to vote out his economic policies.

      • Kitty MLB

        Yes, Cameron is quite spineless, pusillanimous in character,
        he would never have wanted to proceed with a minority government,
        not because of the fear of failure but because he is a Lib Dem at heart.
        Also we can blame them. Cameron was a naïve fool to trust that they
        would behave with honour, integrity and principle.
        They have been nothing but the opposition within government and
        have made the Conservative Party look incapable and weak.

  • david trant

    What recovery?

    Britain’s economic recovery is increasing the disparity between London and the rest of the UK, according to a thinktank report.

    The Centre for Cities found that 80% of new private sector jobs
    between 2010 and 2012 were created in the capital, leading to the
    thinktank warning that the UK was “failing to make the most of [other]
    cities’ economic potential”.

    Yeah in the winebars of the West End and the City, nowhere else.

    • HookesLaw

      As the cities minister said, of the million jobs created in the last two years 750,000 were created outside London.
      The report you misrepresent talks only about cities amongst which it praises Bristol and it says the conurbation of Manchester and Leeds both contributed more than the whole of Wales

      • david trant

        City Minster tell truth, me thinks like all the figures produced by the Coalition just spin and lies. something they have taken up from New Labour and added extra gloss to.

        • RavenRandom

          You’re not been rational now. The numbers are pretty plain and well audited and multiple sourced.
          What you have is known as a disconfirmation bias; everything undermining your position, no matter how factual is ignored or played down or cherry picked. You also have a confirmation bias, every stat that supports your position is played up and believed.
          Most people do it to a greater or lesser degree. If you know you’re doing it, or prone to it you can look out for it.

          • david trant

            I didn’t believe them when New Labour published them, I don’t believe them now.

            • RavenRandom

              Then you’re a conspiracy theorist and have only a tenuous grasp on reality.

        • HookesLaw

          A classic bigot.

    • RavenRandom

      Between 2010 and 2012? It’s 2014 now, lots of job gains in 2013, were they all in London as well?
      A recovery in London is still a recovery, you might want to examine your comprehension of terms.

    • Reconstruct

      OK, so how do you explain that the rate of job growth in Yorkshire over the last two years has been nearly double that of England as a whole (gain of 6% for Yorkshire vs 3.4% for England as a whole). How do you explain that Yorkshire has created 168k jobs over the last two years, vs London’s 163k, and the Southeast’s 149k?

      Actually, not really questions for you, but certainly for the ‘Centre for Cities’.

  • david trant

    Highly overpaid journalist, (aren’t they all) moans about the fact he might have to pay more tax. What Balls should also announce as well as taxing the undeserving wealthy (yes I mean you) is a reduction in VAT to 15%, something that would benefit everyone, and stimulate the economy.

    Reverse the tendency of the Tories to use every opportunity to raise that particular tax. Some of us remember when Major tried to put the full rate on domestic energy, one of the most disgusting acts of any government.

    • HookesLaw

      Journalists may be a waste of space but not many earn over £150k, and even fewer people earn the serious money to pay anything significant with this tax.

      • david trant

        Strange when the Daily Mail ran a knocking piece on this issue, they published a poll finding only 16% opposed.

        As for journalists, particularly those like Boris Johnson (paid megabucks by the DT) for him to use his column, (stop tittering at the back there) to oppose when of course it is directed at people like him is particularly sick making.

        I’m sure Mr Nick de Bois is in the same situation, should you use your position of privilege to campaign against a tax increase which would directly affect you?

        • RavenRandom

          Of course only a few are opposed. “Hey we’re going to take this guys stuff and give it to you, for free. How do you feel about that?”
          “Free stuff? Great.”
          Doesn’t make it the right thing to do morally or economically, pandering to greed and envy.

          • Dogzzz

            As a worker who will probably never ever earn enough to pay the top rates of tax, I would rather have a tax system which works, which rewarded hard work, enterprise and successful industries which create wealth, jobs and benefit society.

            Instead labour offer us a tax system which punishes, dissinsentivises and hurts the economy.

            Why increase taxes if that is guaranteed to NOT raise more revenue and will only annoy those who we need to create more private sector jobs? It is an utterly stupid policy, that can only be justifed by envy and hatred. There are no rational, reasonable or logical reasons for increasing the top rate of tax. Only emotive waffle fed by negative emotions.

        • HookesLaw

          Like I said – not many. You were saying most would pay extra.

        • Mynydd

          It’s called vested interest.

    • Dogzzz

      So you like the idea of hurting the economy, raising less revenue, and forcing the poorest to paying far more tax too, (as is also labour’s pledge to re-introduce the 10p rate for people who currently earn too little to pay income tax) purely to hurt people who you dislike?

      That is not a sound, valid, workable, sustainable, just or ethical economic policy.

  • RavenRandom

    Balls will tax everyone more. It’s what they do. “Fairness” becomes a broken word, doublespeak for state sponsored theft, you pay tax he pays none.
    I find the appeal to the 35% odious at best. How divisive, I would hope any party, Conservative or Labour would at least think about the interests of all Britons, and not just their own core vote.
    What sort of democracy allows a majority on just 35%, seems broken to me.
    The Conservatives need to appeal to all Britons, Labour is become divisive and sectarian. The 70s policies they’re espousing are absurd. Odd Labour have adopted the “one nation” thing when I’ve never seen them less factional. This must be used against them.

    • telemachus

      Son the 35% guarantees power so pander to these
      It is how power politics has always worked
      The key is that having obtained power the resources are shared fairly round the population not to the top7% as at present
      Added to which do you not want a charismatic genius in place of the grey Osborne in charge

      • Colonel Mustard

        Why weren’t the resources “shared around” from 1997 to 2010 when Labour had an effective majority? Why after 13 years of Labour was there still an issue with welfare? Why did so many die of neglect in hospitals? Why were so many youngsters still leaving school unable to read, write or reason?

        And Balls is far from being a genius, let alone a charismatic genius.

        Do try to understand, little telemachus, that the world around you is not constructed from your peculiar prism and no amount of tagging the top comment is going to change that.

      • Colonel Mustard
      • RavenRandom

        The only father you are is one of lies, you witless lickspittle.

      • Dogzzz

        “Added to which do you not want a charismatic genius in place of the grey Osborne in charge”

        Yes, who wouldn’t? So why vote labour and get a delusional, hate filled, emotionally retarded, idiotic lunatic by the name of Ed Balls?

      • Dogzzz

        “The key is that having obtained power the resources are shared fairly round the population not to the top7% as at present”

        The top1% pay 33% into the system to be shared around. This is grossly unfair on that 1% and massively benefitial to the 99% who pay a lot less than their fair share.

        When that 1% finally tire of being abused by ungrateful, envy and ignorant driven lefties, and leave, taking their revenue with them…. Where do you suggest the massive shortfall in revenue will be clawed back from?

    • CaptainDallas

      To be fair, I’m in the higher tax bracket and I’m worse off under the Tories too.

      So the old line about Labour taxing beyond fairness can be applied to the Tories too.

      Of course, I’m not a multi-millionaire or an old Etonian, so maybe that has something to do with it.

      • RavenRandom

        Yes… Sadly it is a bit of a least bad decision at the moment.

  • Reconstruct

    Given the likelihood that a 50% tax rate will discourage investment, cut growth, and bring in next to nothing anyway, Conservatives should be asking Balls ‘How will you pay for this tax rise’.

    They should then explain that the bill will be/must be picked up by middle and lower earners and/or mortgage payers.

    • BarkingAtTreehuggers

      “Given the likelihood that a 50% tax rate would discourage investment.”
      Given the likelihood that forever discussing income taxes is designed to obfuscate the fact that it is the taxing of assets what really ought to happen, more like.

      • HookesLaw

        Ever heard of death duties?

        • BarkingAtTreehuggers

          The duty to hand over the home you bought for £3k which is now worth £750k to your offspring?

          • David Kay

            which the government taxes them on at 40%, sometimes this means forcing their adult children out of their family home where they have spent their entire life

            • CaptainDallas

              Housing bubbles have little to do with good financial planning.

              • David Kay

                yes they do. Im already planning ahead for the next one so i can sell all my properties at the maximum market value at the height of the boom and retire

          • HookesLaw

            On death you have an asset of 750k which is taxed

      • Tony_E

        If anything was going to discourage investment, that would be it.

        • BarkingAtTreehuggers

          Encourage ‘investment’ in UK housing stock?
          Why on earth would you want to do that?

    • Mynydd

      If as you say “a 50% tax rate will discourage investment, cut growth, and bring in next to nothing anyway”, why then did Mr Cameron/Osborne impose it for three solid years.

      • Colonel Mustard

        Because the socialist collective who really govern Britain would have howled even more about “tax breaks for the rich”. The leftist narrative that now dominates public life makes it impossible for governments to introduce HK type low tax rates and impossible for an objective debate.

        Balls has proposed his tax increases from an ideological motive not an economic one.

        • MK_81

          “the socialist collective who really govern Britain”

          What in God’s name are you on about?

          ps Balls may well be acting out of ideology rather than pure economics, but given the habits of the current Chancellor and Call Me Dave I would say that’s a bit of a moot point.

          • Colonel Mustard

            The public sector, the unions, the quangos, the third sector and fake charities, the leftist dominated media like the BBC, comedy and the “arts”. All those who have promoted or supported, knowingly or otherwise, the cultural revolution we have experienced since 1989 or thereabouts.

            That is what I am “on about”.

            • MK_81

              You mean the unions which are a shell of their pre-Thatcher selves and the fake charities which include Lawson’s ‘Global Warming Policy Foundation’? And in what sense does comedy or the “arts” ‘really govern Britain’?

              How about taking a step back, taking a considered view and stop parroting what you read in the Mail and Telegraph?

              You’ve got a pretty illogical persecution complex, given that the political left has scarcely been a force for the last 25 years- doesn’t really help this ‘objective debate’ you’re looking for.

              I’m just as suspicious of people who bang on about a ‘neoliberal conspiracy’ but this ‘leftist collective’ stuff really is nonsense, and says more about the people who shout it than they’d probably like.

              • Colonel Mustard

                I don’t read the Daily Mail or Telegraph so sorry to disappoint your tediously predictable prejudices there.

                “the political left has scarcely been a force for the last 25 years”

                Don’t make me laugh. Modern British politics are dominated by leftist thinking and leftist language. Or perhaps you could point me to a well-known conservative comedian on the BBC who regularly takes the piss out of the champagne socialist left?

                PS I can think of quite a few BBC comedians and luvvies who have openly espoused their advocacy or membership of the Labour party on prime time TV. Something to be proud of, apparently.

                • David Kay

                  and their journalists. All members of the NUJ trade union movement that is the Labour Party

                • MK_81

                  If politics today is dominantly left wing then I dread to think what the alternative is. Oh right- Republicanism in the States- very sensible lot they are right now.

                  ps As you amply demonstrate, right wing comedians ain’t funny so they don’t last long. I’m yet to meet a comedian who ‘governs Britain’ though, aside from the current joke of a cabinet of course.

                • Colonel Mustard

                  Perhaps ‘governs the public narrative’ might have been more appropriate, except for Common Purpose of course which aims to actually govern from behind the scenes.

                  Please don’t try the old ‘Blair was not a socialist so the Labour party can disown 1997-2010’ routine. You people do more than ‘dread the alternative’. You spend most of your time slagging it off, mainly by repeating tired old clichés and myths (your comedians too).

                  As for right wing comedians well the fact that you start from a position of asserting they are not funny clearly shows your partisan position. My point was not that they are or are not funny but that they are absent from the BBC. They can’t last long if they never appear in the first place! And that has more to do with the BBC exclusively reading the Guardian than the quality of their humour.

                  As usual your position is based wholly on your negativity towards the right rather than any attempt to persuade the superiority of left wing policies. Having been force fed such tripe for as long as I can remember I merely reciprocate that sentiment.

                • Makroon

                  I would hesitate to tar the whole Labour party with the Brown-Balls virus. Stupid and sheep-like they may be, but the Brown-Balls gang is a corrupt and rotten incubus that has taken over their party. Blair facilitated it, knowing exactly what Brown and Balls were, the many good people in the Labour party sat idly by and let it happen.
                  Let’s face it, Red is just a useful idiot.

                • Nicholas chuzzlewit

                  I agree, mostly. Red is a nasty, dangerous little Marxist bereft of so much as a scrap of integrity.

      • Richard

        They inherited it, they did not impose it.

    • CaptainDallas

      So you think being taxed at a higher rate will dissuade people from earning more?

      Really? As I went from normal tax band to the higher one, not once did it cross my mind that I didn’t want to earn more because of tax. It’s just (another) Tory lie, swallowed by the masses.

      And this nonsensical attitude that these mythical £150k+ earners are all entrepreneurs, ‘wealth creators’ and job creators is ludicrous. Many council leaders are paid that much, for example.

  • wycombewanderer

    As this will raise only a tiny fraction of the money needed to get rid of the deficit he needs to close it in other ways.

    Labour have opposed each and every cut and even promised to reverse some.

    McLuskey won’t allow any future cuts except to wealthier pensioners so tax rises for the many are the only possible way to balance the books, if that is what Balls intends to do.

    The tories need to explain this calmly to the electorate that Balls is either lying or he will tax everyone more!

    • launcher

      Balls doesn’t give a tinker’s cuss about the deficit, all, and I mean all, he wants is to move into 11 Downing St, then he can start plotting to overthrow Milliband.

    • Mynydd

      Labour also opposed Mr Cameron/Osborne’s rise in VAT to 20%, now that was a tax rise for the many

      • Colonel Mustard

        Labour have opposed everything. The clue is in the word ‘oppose’ not the merits or otherwise of the matters being opposed.

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