Why Labour will reverse Cameron’s top rate tax cut

The latest figures from HMRC show that people earning over £150,000 paid almost £10bn more in tax in the three years when the 50p rate was in place. We need to get the deficit down in a fair way.

The Tories like to fix the facts to fit the story they want to tell. Only yesterday we saw them desperately pull together dodgy figures to make the ludicrous claim that people are better off under them, despite overwhelming evidence to the contrary. It only served to show just how out of touch they are.

It’s similar to what they’ve done when it comes to the 50p tax rate. David Cameron and George Osborne are desperate to be able to claim the 50p tax raised as little money as possible. That makes it easier for them to justify giving a tax cut to millionaires at a time when ordinary families are facing a cost-of-living crisis. But the decision to cut the 50p rate was a highly political decision, driven not by the evidence but by David Cameron and George Osborne’s desire to give the richest people in our country a tax cut.

The Tory-led government’s own assessment claims the cost of cutting the rate to 45p, excluding all behavioural changes, was over £3bn. To justify the tax cut the Tories argue that most of this potential revenue would be lost as a result of tax avoidance.  But crucially, the scale of the behavioural impact has been decided by Ministers, not HMRC. And latest figures from the HMRC show that people earning over £150,000 paid almost £10bn more in tax in the three years when the 50p rate was in place than was estimated at the time when the government did its assessment back in 2012.

The Tories also claim that tax revenues rose after they cut the top rate of tax. But the ONS and OBR have both said that many of the highest earners moved income and delayed bonuses by a year after George Osborne’s 2012 Budget in order that they could benefit from the lower top rate of tax. This shifting of income will actually have cost the Treasury millions of pounds in lost revenue.

Labour has been clear that when the deficit is high and ordinary families are seeing their real incomes fall, it simply can’t be right for David Cameron and George Osborne to give the richest people in the country a massive tax cut. So the next Labour government will make changes to create a fairer tax system. That means cracking down on tax avoidance, scrapping the shares for rights scheme and reversing the tax cut for hedge funds. We want a lower 10p starting rate of tax, which would help make work pay and cut taxes for 24 million people on middle and lower incomes.

And in order to ensure that those with the broadest shoulders bear a fairer share of the burden, Ed Balls has today announced that the next Labour government will reverse the Tory top rate tax cut in the next Parliament while we are finishing the job of getting the deficit down.

This is a fairer way to reduce the deficit. And the Tories will have to explain why the richest one per cent of earners should get a tax cut while tough times continue for everyone else.

Shabana Mahmood is shadow exchequer secretary

David Cameron speaks at the World Economic Forum in Davos yesterday. Photograph: Getty Images.

Shabana Mahmood is Labour MP for Birmingham Ladywood.

Photo: Getty
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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.