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The cabinet battle over 50p tax

The new dispute between Balls and Mandelson and why it matters for Labour's future.

By George Eaton Published 15 March 2010 12:20

Today's Daily Mail reports that Ed Balls and Yvette Cooper are pushing Alistair Darling to reduce the salary threshold for the new 50p tax rate from £150,000 to £100,000 in this month's Budget.

The Schools Secretary and his wife previously called for this change ahead of last November's pre-Budget report, but found themselves outmanoeuvred by Peter Mandelson.

This latest dispute is likely to increase the tension between those, such as Mandelson, who view the new tax rate as temporary and regrettable and those, such as Balls, who view it as permanent and desirable.

Unlike the Business Secretary, who believes that it would be madness for Labour to vacate the centre ground, Balls believes that the times call for an unambiguously left-of-centre approach. It's a preview of the sort of the debate we can expect to see in any future leadership contest.

The Blairite wing of the party (at least what's left of it) will argue that any short-term political advantage to be gained from moving to the left is outweighed by the risk of permanently alienating "aspirational" voters. Meanwhile, Balls (who is certain to run) will point to polls suggesting that the 50p tax rate as well as the bonus tax are among the most popular things Labour has done.

Should Darling agree to widen the 50p band in the Budget, it will be first blood to Balls in the battle for Labour's ideological soul.

PS: The potential expansion of the 50p rate is another elephant trap we can expect David Cameron (much to Boris Johnson's consternation) to avoid easily.

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Tags: Lord Mandelson  Ed Balls

 
 

6 comments

David Wearing1's picture

Mon, 2010-03-15 12:43 — David Wearing1

If the polls really do say that "the 50p tax rate as well as the bonus tax are among the most popular things Labour has done", how would pursuing such policies constitute vacating "the centre ground"? Surely in a democracy public opinion, not elite opinion, defines where the centre-ground lies?

Socialists and Social Democrats really need to hammer this point home. Repeated reference needs to be made to the enduring public support that "left-of-centre" policies have, so as to challenge head-on the misconceieved political discourse of what constitutes the left, centre and right of the British political spectrum. For far too long the political class has got away with being to the right of the public, while calling itself "mainstream".

While we're challenging the dominant discourse, what about this nonsensical term, "aspirational"? Do people at the bottom of the income scale not have "aspirations" that might be served well by a little redistribution? Or is their social standing caused simply by a lack of "aspiration", rather than opportunity? New Labour, old Victorians.

And as far as the small minority of "aspirational middle class" folk "earning" £100,000pa (400% the national mean) are concerned, where exactly does aspiration start and greed begin?

Jeremy Manson's picture

Mon, 2010-03-15 13:57 — Jeremy Manson (not verified)

Threatening to permanently increase the top tax rate to more than 40p is pointless and counter-productive. It will do nothing at all to re-distribute wealth and it will not bring in any meaningful amount of tax. Ed Balls and Yvette Cooper are just playing to the gallery.

The government wastes mind-bobbling amounts of money at every moment and it needs to get a grip.

Surely improving child welfare and educational standards are the principle way to improve everybody's situation in the long run?

jeremiah's picture

Tue, 2010-03-16 21:40 — jeremiah

We need to abolish this regressive tax system we all live in. Stealth taxes should be cut way back, most of them are regressive.

The bulk of the tax we all pay should come directly from our incomes as that is the fairest way.

In the last 20 years like it or not the tax burden has been shifted from the top to the middle and bottom and that has got to stop.

All the parties bang on about fairness, well they can start by supporting a 50p tax band.

PS @Riddley Durmang. It is 50p on all earnings OVER £100,000. In your fatuous statement you won't be paying a penny at the 50p rate if you earn £100,000.

Mortimer Bloomington's picture

Tue, 2010-03-16 17:20 — Mortimer Bloomington (not verified)

And how exactly does one improve child welfare and educational standards without creaming some capital off the top end and redistributing accordingly. The fact remains that tax for the rich should be higher than it is for the poor. A policy such as this is fair and it will do nothing to prevent the rich from getting richer - if that's what the free market racketeers are worried about. I always thought this top-end tax was an idea of the Lib Dems; and that it was resuscitated by Labour to win votes.

Riddley Durmang's picture

Tue, 2010-03-16 17:59 — Riddley Durmang (not verified)

50p is insane. The government should not get half of my money. Why would anyone want to live/work here when you can make more money somewhere else and pay less taxes? 50p... So let's say I make 100K a year. The gov't gets 50p so now I just make 50K a yr. Then I get a divorce and my wife gets half so now I make 25K a yr. I might as well just off myself, because I'm doing 100K worth of work and just make 25K.

Paul Bird's picture

Sat, 2010-03-20 00:21 — Paul Bird (not verified)

At last! Some glimmer of hope for those of us in despair at the right wing drift what used to be the Labour party, has taken since 1997. I can't imagine them doing enough to get my vote on May 6th as yet, but it's a good start.

By the way it used to be called ambition, what's wrong with that.

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