Ed Miliband's tax dilemma

He's promised to tax more than Brown and Darling. But which should he raise?

The Tories have given us a preview of one of the strategies we can expect them to use against Ed Miliband, in a new Matt Hancock-penned dossier entitled: "which taxes would you put up, Mr Miliband?".

Miliband has pledged to support a 50:50 split between tax rises and spending cuts, the same balance adopted by Norman Lamont and Ken Clarke during the last period of significant fiscal tightening in the 1990s. This marks a break with the Brown-Darling plan which adopted a 67:33 split between taxation and spending.

In a interview with Channel 4 News last night, Milband confirmed that he would "do more from taxation" than Darling and cited his plans for a higher banking lavy and a crackdown on tax avoidance. The last Labour government planned £73bn of spending cuts and tax rises (George Osborne has announced an additional £40bn) which means that, assuming he retains the £21bn tax rises announced by Darling, Miliband needs to raise an additional £15.5bn from taxation.

As well as a beefed-up banking levy, which would raise an extra £5bn, he should consider reviving the original Lib Dem plan to tax capital gains at the same rate as income (the Tories limited the rise to 28 per cent). This would raise £3.2bn and have the advantage of dividing the coalition, while also wooing disillusioned Lib Dem supporters. Cutting the annual CGT exemption to £2,000 from its present level of £10,100, would raise a further £900m.

The Miliband team should also look at poaching the Lib Dem plan for a "mansion tax", a policy supported by David, but not Ed, during the leadership campaign. A 1 per cent a year levy on homes worth more than £2m would raise at least £1.7bn. These measures, combined with a tax avoidance crackdown of the sort planned by the coalition, would comfortably raise enough for Miliband to fulfil his 50:50 pledge.

By the end of the conference season and the all-important spending review, he will need to have some answers.

George Eaton is political editor of the New Statesman.

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Beware, hard Brexiteers - Ruth Davidson is coming for you

The Scottish Conservative leader is well-positioned to fight. 

Wanted: Charismatic leader with working-class roots and a populist touch who can take on the Brexiteers, including some in the government, and do so convincingly.

Enter Ruth Davidson. 

While many Tory MPs quietly share her opposition to a hard Brexit, those who dare to be loud tend to be backbenchers like Anna Soubry and Nicky Morgan. 

By contrast, the Scottish Conservative leader already has huge credibility for rebuilding her party north of the border. Her appearances in the last days of the EU referendum campaign made her a star in the south as well. And she has no qualms about making a joke at Boris Johnson’s expense

Speaking at the Institute of Directors on Monday, Davidson said Brexiteers like Nigel Farage should stop “needling” European leaders.

“I say to the Ukip politicians, when they chuckle and bray about the result in June, grow up,” she declared. “Let us show a bit more respect for these European neighbours and allies.”

Davidson is particularly concerned that Brexiteers underestimate the deeply emotional and political response of other EU nations. 

The negotiations will be 27 to 1, she pointed out: “I would suggest that macho, beer swilling, posturing at the golf club bar isn’t going to get us anywhere.”

At a time when free trade is increasingly a dirty word, Davidson is also striking in her defence of the single market. As a child, she recalls, every plate of food on the table was there because her father, a self-made businessman, had "made stuff and sold it abroad". 

She attacked the Daily Mail for its front cover branding the judges who ruled against the government’s bid to trigger Article 50 “enemies of the people”. 

When the headline was published, Theresa May and Cabinet ministers stressed the freedom of the press. By contrast, Davidson, a former journalist, said that to undermine “the guardians of our democracy” in this way was “an utter disgrace”. 

Davidson might have chosen Ukip and the Daily Mail to skewer, but her attacks could apply to certain Brexiteers in her party as well. 

When The Staggers enquired whether this included the Italy-baiting Foreign Secretary Johnson, she launched a somewhat muted defence.

Saying she was “surprised by the way Boris has taken to the job”, she added: “To be honest, when you have got such a big thing happening and when you have a team in place that has been doing the preparatory work, it doesn’t make sense to reshuffle the benches."

Nevertheless, despite her outsider role, the team matters to Davidson. Part of her electoral success in Scotland is down the way she has capitalised on the anti-independence feeling after the Scottish referendum. If the UK heads for a hard Brexit, she too will have to fend off accusations that her party is the party of division. 

Indeed, for all her jibes at the Brexiteers, Davidson has a serious message. Since the EU referendum, she is “beginning to see embryos of where Scotland has gone post-referendum”. And, she warned: “I do not think we want that division.”

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.