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15 November 2010

Miliband stands firm on the 50p tax — or does he?

Labour leader committed to 50p tax rate "for the foreseeable future".

By George Eaton

As Mehdi noted at the weekend, Alan Johnson and Ed Miliband are engaged in a political struggle over the 50p tax. Johnson views it as a short-term response to the financial crisis and would like to scrap it at the earliest possible opportunity; Miliband views it as a social democratic achievement and would like to make it permanent.

For those who missed it, Johnson said in an interview with the Times (£):

I am only backing 50p for the times we are in. It is not ideal; five years ago (we) wouldn’t have done it. Our policy has to be based on fairness and what encourages people to do well.

Today, a spokesman for Miliband has responded, insisting that “we remain committed to it for now and for the foreseeable future”. That may seem clear enough but the precise formulation — note the telling reference to “the foreseeable future” — leaves Miliband with a significant amount of wriggle room.

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Having won the argument on progressive taxation, it would be foolish for Labour to retreat now. The 50p tax is popular with voters, raises vital revenue and acts as a brake on runaway inequality. It is also an important symbol of Labour’s commitment to a fairer society.

Johnson’s comments on the 50p rate, combined with his firm opposition to a gradute tax (he is said to have had a “blazing row with Miliband over the issue at the party conference) represent a serious challenge to Miliband’s authority. He must not back down.