Labour leader Jeremy Corbyn yesterday pledged to hike taxes for 1.3m Brits earning more than £80,000, as he attempts to find the funds for a £50bn spending spree.
Launching Labour’s manifesto, Corbyn put the City’s employers and high earners squarely in the party’s crosshairs, pledging to crack down on “excessive pay”.
Under the proposals, workers earning more than £80,000 face paying a 45 per cent tax rate. Those earning more than £123,000 would face a newly introduced 50 per cent tax rate.
Labour estimates the proposals could raise around £4.5bn, but the Institute for Fiscal Studies questioned the calculations.
Corbyn’s team claim the policy would affect fewer than five per cent of taxpayers, but the IFS noted these 1.3m workers already pay over 40 per cent of all income tax. It warned the policies could encourage these workers to retire earlier, use tax advantages to save in their pensions, or even leave the UK – dramatically reducing the potential haul in revenues.
In the IFS’ worst-case scenario, the tax hikes would add less than £500m to the government’s purse.
“Labour’s policy could raise something like the £4.5bn per year it expects, but it could also raise nothing,” IFS associate director Robert Joyce said.
The IFS said the plans would result in a marginal tax rate of more than 73 per cent for workers earning between £100,000 and £123,000, once NI is taken into account.
Labour also confirmed plans to introduce a new “excessive pay levy” on firms paying staff more than £330,000, as well as hiking the top rate of corporation tax to 26 per cent through the next parliament.
Corbyn’s manifesto also commits to a range of major market interventions, including:
• Breaking up RBS to create new local public banks “better matched to their customers’ needs”
• Changing the law so banks can’t close a branch “where there is a clear local need”
• The introduction of regional investment banks, which Corbyn claims will support “inclusive growth in their communities”.
Last night Len McCluskey, general secretary of Unite, Labour’s biggest backer, claimed losing as many as 30 seats could still be considered a success for Labour in the election. McCluskey said: “I believe that if Labour can hold on to 200 seats or so it will be a successful campaign”.