Clegg: property taxes should replace the 50p rate

Deputy Prime Minister says 50p rate will be scrapped once low and middle incomes are “breathing more

If George Osborne's hint in last week's Budget wasn't enough, we now know for certain that the 50p tax rate will be scrapped at some point during this parliament. In an interview with the Financial Times, Nick Clegg suggests that the tax will be abolished once those on low and middle incomes are "breathing more easily" and will be replaced with a range of new property taxes.

As Clegg points out, Osborne won't want to scrap the 50p rate until he's certain that he can offer relief elsewhere. Polls show that the tax is relatively popular with voters and Labour would seize any opportunity to portray the Chancellor as a friend of the rich. It's notable that while the progressive 50p rate is "temporary", the regressive VAT increase is "permanent".

Senior Lib Dems, most notably Vince Cable, have long spoken of their desire to divert taxation away from income and towards property. In his recent New Statesman essay on reclaiming Keynes for the coalition, the Business Secretary wrote of the need to shift taxation "away from profitable, productive investment (as opposed to unproductive asset accumulation, as with property)".

Before this, in his speech at last year's Lib Dem conference, Cable also argued for higher taxes on land as well as property (the subject of a recent NScover story by Jason Cowley).

He said:

It will be said that in a world of internationally mobile capital and people it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property, and land, which cannot run away, [and] represents in Britain an extreme concentration of wealth.

Over the weekend, Cable returned to this theme in several interviews and spoke of the need to "shift from high marginal rates of tax on income which are undesirable, to taxation of wealth, including property". Asked if he was considering a so-called "mansion tax", he said: "I'm sure that's one of the things we're going to have to look at."

Clegg's FT interview is short on detail, although, unlike Cable, he rules out a version of the "mansion tax" proposed by the Lib Dems at the last election and supported by David Miliband during the Labour leadership contest. Instead, he suggests the coalition will "look at the way the council tax system is structured; the way stamp duty is structured".

Another option, as Jason suggested in his piece, would be to introduce capital gains tax on the profits made from the sale of first homes.

On taxation at least, the Lib Dems can now claim to be exerting serious influence on the Tories. Osborne has embraced their plan to raise the personal income-tax allowance to £10,000 by the end of this parliament and is now set to restructure the taxation of top earners along liberal lines.

Labour must hope that the 50p rate raises some significant revenue. If not, the party could be left on the wrong side of the tax debate.

George Eaton is political editor of the New Statesman.

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Owen Smith is naïve if he thinks misogynist abuse in Labour started with Jeremy Corbyn

“We didn’t have this sort of abuse before Jeremy Corbyn became the leader.”

Owen Smith, the MP challenging Jeremy Corbyn in the Labour leadership contest, has told BBC News that the party’s nastier side is a result of its leader.

He said:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.

“It’s now become something that is being talked about on television, on radio, and in newspapers. And Angela is right, it has been effectively licenced within the last nine months.

“We’re the Labour party. We’ve got to be about fairness, and tolerance, and equality. It’s in our DNA. So for us to be reduced to this infighting is awful. Now, I understand why people feel passionately about the future of our party – I feel passionately about that. I feel we’re in danger of splitting and being destroyed.

“But we can’t tolerate it. And it isn’t good enough for Jeremy simply to say he has threats too. Well, I’ve had death threats, I’ve had threats too, but I’m telling him, it’s got to be stamped out. We’ve got to have zero tolerance of this in the Labour party.”

While Smith’s conclusion is correct, his analysis is worryingly wrong.

Whether it is out of incompetence or an unwillingness to see the extent of the situation, Corbyn has done very little to stamp out abuse in his party, which has thus been allowed to escalate. It is fair enough of Smith to criticise him for his failure to stem the flow and punish the perpetrators.

It is also reasonable to condemn Corbyn's inability to stop allies like Chancellor John McDonnell and Unite leader Len McCluskey using violent language (“lynch mob”, “fucking useless”, etc) about their opponents, which feeds into the aggressive atmosphere. Though, as I’ve written before, Labour politicians on all sides have a duty to watch their words.

But it’s when we see how Smith came to the point of urging Corbyn to take more responsibility that we should worry. Smith confidently argues that there wasn’t “this sort of abuse and intolerance, misogyny, antisemitism” in the party before Corbyn was voted in. (I assume when he says “this sort”, he means online, death threats, letters, and abuse at protests. The sort that has been high-profile recently).

This is naïve. Anyone involved in Labour politics – or anything close to it – for longer than Corbyn’s leadership could tell Smith that misogyny and antisemitism have been around for a pretty long time. Perhaps because Smith isn’t the prime target, he hasn’t been paying close enough attention. Sexism wasn’t just invented nine months ago, and we shouldn’t let the belief set in that it did – then it simply becomes a useful tool for Corbyn’s detractors to bash him with, rather than a longstanding, structural problem to solve.

Smith's lament that “it’s now become something that is being talked about” is also jarring. Isnt it a good thing that such abuse is now being called out so publicly, and closely scrutinised by the media?

In my eyes, this is a bit like the argument that Corbyn has lost Labour’s heartlands. No, he hasn’t. They have been slowly slipping away for years – and we all noticed when Labour took a beating in the last general election (way before Corbyn had anything to do with the Labour leadership). As with the abuse, Corbyn hasn’t done much to address this, and his inaction has therefore exacerbated it. But if we tell ourselves that it started with him, then we’re grasping for a very, very simple solution (remove Corbyn = automatic win in the North, and immediate erasure of misogyny and antisemitism) to a problem we have catastrophically failed to analyse.

Anoosh Chakelian is deputy web editor at the New Statesman.