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: