The most interesting conversation in Westminster right now is what a new Labour leader could do to restore the party’s fortunes. One idea that could be particularly politically potent is a bold move on tax.
Since Labour came to power, the number of people paying the top rate of tax has pretty much doubled. Brown has kept Labour’s 1997 manifesto promise not to raise the top rate of income tax but he has done so at the cost of making more and more people pay tax at the top rate; a typical Brown dodge. This fiscal drag has had the same effect as an actual tax rise and resulted in people who are not earning huge amounts of money—police inspectors, for example, who earn in the mid 40 thousands—paying the top rate.
A new Labour leader could make a play for the middle class and break with Brown’s numerical manipulation by announcing that no one who earns less than £50,000 a year would pay tax at 40 percent.
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