Ed Balls speaks at the Labour conference in Brighton last year. Photograph: Getty Images.
Show Hide image

Labour targets Osborne's 24 tax rises

The party says "It’s the same old Tory con – giving with one hand while taking away much more with the other."

One of the main messages that George Osborne will aim to send in his Budget tomorrow is that he believes in cutting taxes. Having increased the personal allowance to £10,000 (despite David Cameron arguing that the measure was unaffordable during the first 2010 leaders' debate) from £6,475 in 2010, he will attempt to claim ownership of this Lib Dem policy for the Conservatives when he announces that it will rise to at least £10,500 next year. The Chancellor will frame this as his response to the "cost-of-living crisis" (without using those words).

But as Labour has highlighted tonight, he also has a record of raising taxes. The party has issued a list of 24 levies increased by Osborne since 2010, including VAT, income tax age-related allowances ("the granny tax"), capital gains tax and inheritance tax. It calculates that taxes have risen by £24bn so far this parliament, with a further £3bn of increases to follow in 2014/15.

A party spokesman emphasised to me that Labour is "not opposed" to all of the tax rises (not least because some of them are progressive) but that it wanted to remind people that Osborne has "put taxes up significantly". The opposition wants voters to remember measures such as the VAT rise, rather than just the hike in the personal allowance, the key point being that most are worse off once all tax and benefit changes are taken into account. Here's the accompanying statement from shadow chief secretary to the Treasury Chris Leslie:

“We need a Budget that tackles the cost-of-living crisis which has left working people £1,600 a year worse off under the Tories.

“George Osborne wants to take credit for increasing the personal allowance, but hopes people forget his 24 Tory tax rises including the VAT hike. While millionaires have been given a huge tax cut the truth is millions of hard-working people have seen their taxes go up.

“It’s the same old Tory con – giving with one hand while taking away much more with the other. The VAT rise alone has cost families with children an average of £1,350 over the last three years. And the 24 Tory tax rises don't include the cuts to tax credits which have hit millions of working families.

“A Labour Budget this week would cut taxes for 24 million people on middle and lower incomes by introducing a lower 10p starting rate of tax.

“We’d get young people off benefits and into work with a compulsory jobs guarantee, freeze energy bills, expand free childcare, get more homes built and cut business rates for small firms. We’d also reverse the £3 billion tax cut for the top one per cent of earners to get the deficit down in a fairer way.”

The Tories will no doubt cite Labour's attack as further evidence that it the party is unwilling to take the "tough choices" required to reduce the deficit (forecast to be £111bn this year). But Osborne's record will also increase the demands from his own side for some relief to be offered in the Budget.

Here's the list of 24 tax rises released by Labour.

The 24 Tory Tax Rises

 

1.    VAT increased – to 20 per cent from 2011

 

2.    Income Tax age-related allowances frozen and eligibility restricted (“Granny Tax”) from 2013-14

 

3.    Income Tax higher rate threshold cut to £42,475 in 2011-12

 

4.    Higher Income Child Benefit Charge introduced 2013

 

5.    National Insurance Contributions rates, limits and thresholds increased in line with CPI rather than RPI from 2012-13

 

6.    Income Tax higher rate threshold frozen at £42,475 in 2012-13

 

7.    Insurance premium tax increased – from 2011

 

8.    Capital Gains Tax increased – to 28 per cent for higher rate taxpayers from June 2010

 

9.    New Beer Duty introduced on high strength beers from 2011

 

10. Duty on hand-rolling tobacco increased by an additional 10 per cent from 2011-12

 

11. ISA subscription limit uprated in line with CPI rather than RPI from 2012-13

 

12. National Insurance Contributions changes to contracting-out rebates from 2012-13

 

13. Capital Gains Tax annual exempt amount frozen, 2012-13

 

14. Stamp Duty Land Tax increase to 7 per cent on properties over £2 million from 2012-13

 

15. VAT increases on a range of items, including caravans, sports drinks, and listed buildings from 2012

 

16. Duty on tobacco increased by RPI + 5 per cent in 2012

 

17. Income Tax higher rate threshold cut to £41,450 in 2013-14

 

18. Capital Gains Tax annual exempt amount increased in line with CPI rather than RPI from 2013-14

 

19. Income Tax cap on reliefs introduced from 2013-14

 

20. Pension tax relief restricted from 2014-15 21.

 

21. Income Tax higher rate threshold Increase capped at 1 per cent in 2014-15 and 2015-16

 

22. Capital Gains Tax annual exempt amount increase capped at 1 per cent, 2014-15 and 2015-16

 

23. Inheritance Tax threshold frozen in 2015-16

 

24. National Insurance Contributions ending of contracting-out rebates from 2016-17

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Why Angela Merkel's comments about the UK and US shouldn't be given too much weight

The Chancellor's comments are aimed at a domestic and European audience, and she won't be abandoning Anglo-German relationships just yet.

Angela Merkel’s latest remarks do not seem well-judged but should not be given undue significance. Speaking as part of a rally in Munich for her sister party, the CSU, the German Chancellor claimed “we Europeans must really take our own fate into our hands”.

The comments should be read in the context of September's German elections and Merkel’s determination to restrain the fortune of her main political rival, Martin Schulz – obviously a strong Europhile and a committed Trump critic. Sigmar Gabriel - previously seen as a candidate to lead the left-wing SPD - has for some time been pressing for Germany and Europe to have “enough self-confidence” to stand up to Trump. He called for a “self-confident position, not just on behalf of us Germans but all Europeans”. Merkel is in part responding to this pressure.

Her words were well received by her audience. The beer hall crowd erupted into sustained applause. But taking an implicit pop at Donald Trump is hardly likely to be a divisive tactic at such a gathering. Criticising the UK post-Brexit and the US under Trump is the sort of virtue signalling guaranteed to ensure a good clap.

It’s not clear that the comments represent that much of a new departure, as she herself has since claimed. She said something similar earlier this year. In January, after the publication of Donald Trump’s interview with The Times and Bild, she said that “we Europeans have our fate in our own hands”.

At one level what Merkel said is something of a truism: in two year’s time Britain will no longer be directly deciding the fate of the EU. In future no British Prime Minister will attend the European Council, and British MEPs will leave the Parliament at the next round of European elections in 2019. Yet Merkel’s words “we Europeans”, conflate Europe and the EU, something she has previously rejected. Back in July last year, at a joint press conference with Theresa May, she said: “the UK after all remains part of Europe, if not of the Union”.

At the same press conference, Merkel also confirmed that the EU and the UK would need to continue to work together. At that time she even used the first person plural to include Britain, saying “we have certain missions also to fulfil with the rest of the world” – there the ‘we’ meant Britain and the EU, now the 'we' excludes Britain.

Her comments surely also mark a frustration born of difficulties at the G7 summit over climate change, but Britain and Germany agreed at the meeting in Sicily on the Paris Accord. More broadly, the next few months will be crucial for determining the future relationship between Britain and the EU. There will be many difficult negotiations ahead.

Merkel is widely expected to remain the German Chancellor after this autumn’s election. As the single most powerful individual in the EU27, she is the most crucial person in determining future relations between the UK and the EU. Indeed, to some extent, it was her intransigence during Cameron’s ‘renegotiation’ which precipitated Brexit itself. She also needs to watch with care growing irritation across the EU at the (perceived) extent of German influence and control over the institutions and direction of the European project. Recent reports in the Frankfurter Allgemeine Zeitung which suggested a Merkel plan for Jens Weidmann of the Bundesbank to succeed Mario Draghi at the ECB have not gone down well across southern Europe. For those critics, the hands controlling the fate of Europe are Merkel’s.

Brexit remains a crucial challenge for the EU. How the issue is handled will shape the future of the Union. Many across Europe’s capitals are worried that Brussels risks driving Britain further away than Brexit will require; they are worried lest the Channel becomes metaphorically wider and Britain turns its back on the continent. On the UK side, Theresa May has accepted the EU, and particularly Merkel’s, insistence, that there can be no cherry picking, and therefore she has committed to leaving the single market as well as the EU. May has offered a “deep and special” partnership and a comprehensive free trading arrangement. Merkel should welcome Britain’s clarity. She must work with new French President Emmanuel Macron and others to lead the EU towards a new relationship with Britain – a close partnership which protects free trade, security and the other forms of cooperation which benefit all Europeans.

Henry Newman is the director of Open Europe. He tweets @henrynewman.

0800 7318496