Coffee House

Chuka Umunna fails to defend the economics of a 52p tax. But voters like it, he says.

9 February 2014

6:57 PM

9 February 2014

6:57 PM

How many FTSE 100 chief executives support Labour? How many FTSE 250 chief execs back Ed Miliband? Difficult questions for Chuka Umunna, Labour’s Shadow Business Secretary, in his outing on the BBC’s Sunday Politics today. Labour’s plan to jack up the top rate of income tax to 52 per cent (up from 47 per cent) has sent a fairly clear message about its attitude to business. Digby Jones, an ex-CBI boss who served in Gordon Brown’s government, has summarized Miliband’s position as: ‘if it creates wealth, let’s kick it.’ Stuart Rose, ex-M&S ceo, says the 50p tax borders on ‘predatory taxation.’ The head of the London Stock Exchange says Milband’s 50p tax (or 52p, when you count National Insurance) will deter entrepreneurs.

Chuka Umunna had all of these quotes read out to him on Sunday Politics, but the most interesting part of the exchange came when he was asked if he believed in the concept of tax being so high that it became counter-productive. He mentioned the 75 per cent tax rate may be a bad idea. It’s a worryingly high limit: he would stop just short of François Hollande – but not that short of him. When asked to name a single major economy that taxes the best-paid at 52 per cent of their income, he could not. (And that’s because there isn’t one. A random list of our competitors: the US has a top rate of tax of 39.6 per cent, Japan 50.8 per cent, Australia  and Germany 45 per cent. In Singapore it’s 20 per cent, Hong Kong 15 per cent and Russia 13 per cent Only Scandi countries go as high as 52per cent).


Umunna’s defence was not that 52 per cent made economic sense, but that British voters who would not pay the tax are in favour of it – no surprise there, people are generally in favour of taxing people more rich than they are. But in government, ministers have to decide how best to run a country. And whether it’s worth chasing away highly mobile super taxpayers (in Britain, the top 0.1 per cent pay 14 per cent of income tax, more than the bottom 50 per cent). Hollande thought it was worth it – France has paid the price. Labour seems inspired, rather than shocked, at the results. Anyway, here’s the audio:

Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.

Show comments
  • wibbling

    And if you look at those low tax economies they are all doing better – consistently throughout history – than Britain has.

    High tax, low growth, no jobs, no wealth only big government. Low tax we get growth, wealth and jobs.

  • Terry Field

    It is simple.
    Destroy economic activity; create many millions of ill educated slobs and then buy their votes; then remain on office – with short interruptions for other failed parties – for ever.
    And that is why Britain is finished.
    SO glad I left.

  • D Whiggery

    “Umunna’s defence was not that 52 per cent made economic sense, but that British voters who would not pay the tax are in favour of it – no surprise there, people are generally in favour of taxing people more rich than they are.”

    I think what Chuka’s engaging in is that thing they call populism.

  • RavenRandom

    Thieving immoral irresponsible incompetent Labour.

    • Nicholas chuzzlewit

      Labour, the party of lies, lying and liars.

  • David B

    They have learned one thing from Tony, policy by focus group. Doesn’t matter if it is a good policy or a bad policy as long as it’s popular and can be used for political .gain, then Labour will adopt it.

    Economic damage traded for personal power!

  • Mynydd


    • Nicholas chuzzlewit

      I would point out to said Farmer that 350,000 people currently contribute 30% of all income tax collected (Office of National Statistics refers). It is therefore a good idea not to annoy these people too much because they are also the most mobile members of society and many of them will happily take their skills, enterprise, ambition and money to a different tax regime if they feel they are being punitively treated by a group of politicians who care more about spite and envy (like the idiot contributor Mynydd) than the effective collection of tax revenue. I would also point out that if these wealthy and mobile people move to say the USA, you and other lower income workers will have to pick up the difference. We cannot borrow that money because we have, thanks to Gordon Brown, a gigantic structural deficit. I would encourage that farmer to support a small cut in that tax rate to 40% where it was for 97% of the time during the last Labour dictatorship because a few more wealthy individuals might actual come to Britain and thus contribute even more to the cost of dredging rivers etc. Finally, I would advise him or her to ignore leftist trolls like you who are interested only in propaganda rather than the effective collection of revenue.

  • amphibious

    How many FTSE 100 chief executives support Labour?” and “voters who would not pay the tax are in favour of it – no surprise there” these two samples exemplify this article – think how much ink could have been saved had the rest been excluded, it added nowt to the message. I esp lovedPickled on AQ last week when he proclaimed that the top 1% of income tax payers provide 30% of income tax revenue – nicely selective and, whilst not mendacious is a legal sense, so tendentious that it could fail the Fair trading Act.
    Assuming, (a) that all income is declared, (b) that (a) is true then (c) I have a bridge that you might like to buy, plus free steak knives.

  • Daniel Maris

    Lots of other economies have real property taxes that definitely dip into the pockets of the rich. We have the peanut tax – the council tax which makes the rich smile.

    You’re not comparing like with like.

  • Ian Walker

    They don’t intend to raise the tax. Just stoke up their client voters with the thought of all those toffs crying into their caviar.

  • Simon McTuffington

    chukka’s voice makes me sick, why doesn’t he contribute all his wages to the economy if he cares so damn much

  • Two Bob

    Voters like tougher immigration policies but you wont do that will you?

  • Rowdie111

    It looks like they will win come 2015 with their forever ‘political, class warfare battle’ which they have succeeded in implanting into the psyche of the ave Brit. It’s so outdated but they keep making it’s so easy ..the ‘its them or us’ line. The politics of envy as ever.
    The average joe bloggs doesn’t realize that all they are after is to be in charge and in the jobs of running the show, whether it be Government positions, heads of quangos, heads of Unions, heads of councils, heads of public sectors,…wherever all with jobs that are paid hundreds of thousands of pounds.

  • BarkingAtTreehuggers

    Who cares about taxing income? Who? You? I don’t. Not really.

    In a growing asset bubble which Britain appears to be the centre of, I care about a sensible way of taxing assets. But no – the Spectator just will not spectate and observe the real issues or discuss the real solutions which would make the real difference.

  • HookesLaw

    Will Labour be demanding a return to Capital Punishment and the Birch? Voters like that as well.

  • BoiledCabbage

    Great stuff Chukka, just keep it coming all the way to 2015……

    • dalai guevara

      I said it years ago, Chuka is the new Balls. Be very afraid.
      I’ll say it again. Chuka is the new Balls. Be very afraid.

  • alabenn

    This man is the most overrated of the lightweights who currently make up the Labour party, he speaks as though he is entitled to have his pronouncements taken as facts.
    He then blusters as soon as a cursory examination reveal they are ill thought out, he actually out performs Miliband with his fatuous reasoning and he actually believes that because a policy panders to envy and spite, it is good.

    • In2minds

      alabenn is correct – “he speaks as though he is entitled ……….”

      yes his sense of entitlement makes him arrogant, but then being a duffer makes him funny too.

    • James Strong

      He doesn’t get attacked as he should because he is an ‘ethnic’ and so many people who know what a lightweight he is fear they would be denounced as ‘waaycists’ if they treated his ideas and performance as they deserve to be treated.

      • HookesLaw

        Go screw yourself with your ethnic obsession. It all comes down to that and you pretend you are not a nasty prejudiced bigot.

        • Two Bob

          You really are a nasty, vindictive piece of work. And to think your party need people like James Strong to stand any chance of getting a majority…..

      • James Allen


      • Nemerel

        You may wish to engage him in public debate so the electorate could see if you appear better. He combines strong confidence with academic proficiency and he is generally perceived as a prodigy in his field of service. It is no wonder he is always in public spectacle.

    • realfish

      Hang on, alabenn, what about Balls? Or Reeves for that matter, did you see her filiblustering Marr this morning? My God she’s lightweight. I wonder if she’s shut up yet. Or Harman, or Leslie, especially Leslie, Oh and saviour of the Stafford NHS, Burnham
      The thought of these losers in power (on 35%) is seriously frightening.

  • Liberty

    To paraphrase Toby Young’s quote of Adonis, these people would rather put pins in their eyes than agree with the Tories [or Tony Blair] on tax. Logic, revenues, encouraging enttrepreneurs, fairness, etc makes no difference. They hate entrepreneurs anyway and would rather they went to Switzerland or Singapore. If the nations goes bankrupt, let it happen.
    They do not care, they would rather continue with punitive taxes etc because they are idealogical Marxists, little different to religious fanatics. They would – as Hitler did – rather the nation was destroyed than give up on their ideas. They continued spouting the same nonsense in the 80s making Labour unelectible. They must be destroyed with total ruthlessness. This is what Thatcher failed to do – with the public sector – in the 80s and we are paying the price now. They now infest the public sector, education, charities, quangos, local authrorities, the BBC and EU.

    • HookesLaw

      And they are Europhile. Yet the dumb kippers want to put them back in power.

      • Two Bob

        So are you it seems.

        • Hello

          My god, you’re incorrigible. Are you really, genuinely prepared to pursue this faux division to destruction? It’s just so infuriatingly naive.

      • saffrin

        Kippers want UKIP in power.
        You on the other hand want LibLabCon.

    • Colonel Mustard

      Labour is a negative party for negative people. Preventing rather than facilitating. Whining and complaining rather than encouraging. Peddling division and dissatisfaction rather than aspiration and hope.

      • RichardOakes

        …and you say that with a straight face, whilst this lot are in charge. I have never known a time when Britain was so wrought by a culture of hatred, envy and fear, courted by the Conservative government (let’s not pretend the Lib Dems have any effect on their social policies). I’m not a Labour supporter, don’t think I’m defending them, but it is Conservatism which is cynical and divisive.

    • Graeme S

      Nailed IT

    • Nicholas chuzzlewit

      A truly excellent post. Socialism is a disease not a coherent political philosophy and it is slowly atrophying the body of Britain. Forgive the torturous analogy but socialism attacks the ‘muscles’ of a country i.e. It’s enterprising people and businesses that generate the wealth which pays for every last good and service the public consumes. The deadly combination of punitive, spiteful taxation and public demonisation of anything and anybody not controlled by the state weakens and eventually strangles the entire body of enterprise and ambition. Socialism, like any disease however, is ultimately self-defeating as it eventually kills off the body on which it is preying. Such is Britain’s future under Labour.

    • jazz606

      “…..This is what Thatcher failed to do – with the public sector – in the 80s and we are paying the price now. …”

      I’m sure she would like to have done, but her party wouldn’t let her.

  • Shinsei1967

    What Chuka and others seem to forget is that many of the people put off working in the UK (mainly London) by higher tax rates aren’t British and so have no particular patriotic reason to pay more tax so as to balance the NHS or education budget.

    It just takes one Swedish or German CEO or banker, earning £5m in the UK, to decide to relocate to Switzerland (20% tax and skiing every weekend) for HMRC to lose all the additional 50p taxes from 100s of £200k country solicitors or small businessmen who can’t or woukdnt move overseas.

    • HJ777

      The other thing that Chuka Umunna forgets is that there are different types of people who would be paying this rate: the deserving and the undeserving.

      By this I mean that the deserving are the ones who create wealth or who provide something that other people willingly pay for in a competitive market. (James Dyson, Adele and Wayne Rooney are examples of this)

      The undeserving are those who have a high income because of government patronage (industries and occupations where regulation limits competition, professional closed shops, those directly employed in government-funded bodies, those protected by licensure, etc.). This might include members of The Bar (especially those who earn their money from the taxpayers, e.g. Cherie Blair), heads of publicly-funded quangos and charities, many bankers (banking is a very highly regulated industry hence there are rarely any new market entrants), etc.

      The correct course of action is to deal with undeserving high income which simply takes wealth from the rest of us whether we like it or not – not to tax all high earners prohibitively. In other words, if he thinks that some high earners are not meritorious, then tackle the cause, don’t tax the effect.

      • 2trueblue

        Great idea,,, how do you do it?

        • HookesLaw

          Undeserving or not (and the logic being put forward here is tortured at best) the high paid spend what is left to them and pay handsomely in tax on that so the difference in tax revenue is even more marginal than Umunna tries to pretend.

          • Aberrant_Apostrophe

            Indeed. The Government still gets most of its pound of flesh, except the money goes via other earners first. I bet they are annoyed by that inconvenience.

          • 2trueblue

            You don’t do irony, do you?
            Who is supposed to decide who is part os deserving….etc…..
            Liebore never had any idea about tax apart from spending it.

        • HJ777

          Much lower public spending.

          Virtually all government services put out to tender or (better) vouchers so that people can select their supplier, the BBC changed to a core services organisation plus subscription services, abolition of most licensure (medicine, the law, etc.), abolition of The Bar monopoly, remove public funding of most charities and quangos – and that’s just a few examples to be starting with.

    • Daniel Maris

      Yes, but German CEO leaves behind empty £5m house now available for someone else. It’s like being given a free asset, as far as the national economy is concerned.

      We’re overwhelmed with bankers in London. Frightening them off to other countries sounds like a marvellous idea.

      • First L

        You do realise that London is one of the biggest financial centers in the world?

        Frighten all the bankers off to other countries and wave bye bye to London as a city of global importance – oh, and add 20% to the unemployment figures for the capital.