Chancellor Sajid Javid has attacked Labour’s claim that 95 per cent of Brits would pay no more tax under its plans, saying the party’s manifesto includes six policies that would hit middle earners.
These include scrapping tax relief for married couples, reversing cuts to inheritance tax, and raising corporation tax on small businesses.
Labour’s manifesto said its radical agenda for £83bn extra spending a year by 2023-24 would be fully paid for by tax increases on corporations and the top five per cent of earners.
Paul Johnson, the director of the Institute for Fiscal Studies (IFS) think tank, said this was “not credible”.
At an event in Bolton today called the Cost of Corbyn, Javid said: “Labour’s numbers only add up with significant tax rises for the 95 per cent, not just the five.” He also said Labour has a £385bn black hole in its plans that would require either more borrowing or higher taxes.
Shadow chancellor John McDonnell hit back, calling the claims “more debunked fake news”. He accused the Tories of having “no proposals of its own to tackle the crisis in our public services”.
Tory analysis said six policies under Labour would cost “families on all incomes”, calling them tax rises even though some were financial penalties.
It said Labour’s plans to scrap the married person’s allowance would hit millions of households, as 3.6m of them claimed marriage allowance last year.
Labour has also pledged to reverse the recent inheritance tax cuts, which the Conservatives said would hit “significant numbers” of people who “will not be in the top five per cent of earners”.
Another policy the Conservatives said would hit the 95 per cent is the increasing of corporation tax. Labour has said it would increase tax on profits under £300,000 to 21 per cent from 19 per cent.
Labour called the analysis “fake news”, however, saying the “pensions tax” the Conservatives included in its list did not exist. The Tories said Labour’s plans for a financial transactions tax and to make companies give shares to workers “are a tax raid on pensions”.
Javid doubled down on a claim that spending plans would cost £1.2 trillion over the next parliament. Labour have pledged to borrow around £400bn and raise £415bn in tax, which the chancellor said leaves a £385bn hole in the party’s accounts.
He said: “That means tax hikes on hard-working families on lower and middle incomes.”
However, the fact-checker Full Fact said at the start of the election campaign that the Tories’ £1.2 trillion number had “serious problems” as it included a number of uncertain figures.
Javid’s attack on Corbyn’s plans came after a Kantar survey showed Labour closing the gap on the Tories. The poll had the Conservatives lead at 11 points compared to 18 a week ago.