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No tax rise for people on less than £80k – Labour

Business & Economy 07 May 2017
No tax rise for people on less than £80k – Labour

No tax rise for people on less than £80k – Labour

John McDonnell will say only 5% of earners would pay more tax, but opponents call it a tax raid on Britain's professional classes.

Video: McDonnell: 'We're talking about modest increases'

By Jon Craig, Chief Political Correspondent

The shadow chancellor is heading for a clash with opponents on tax as he unveils plans which are likely to mean increases for anyone earning more than £80,000 a year.

In a speech in east London, John McDonnell will promise what he calls a personal tax guarantee, which he says would protect low and middle income earners.

He will pledge that under a Labour government there would be no increase in the standard rate of VAT, income tax for those earning below £80,000, or personal national insurance contributions.

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He will say only the highest earners, the top 5%, would be asked to pay more tax.

But his political opponents are accusing him of a tax raid on the professional classes. They claim anyone earning more than £80,000 would face a tax hike under Labour and that up to 1.2 million people could be hit.

John McDonnell
Image: John McDonnell will outline his tax plan to an audience in east London on Sunday

Mr McDonnell's proposals also suggest he would bring back the 50p tax rate introduced by former Labour chancellor Alistair Darling and later scrapped by his Tory successor George Osborne.

In his speech, Mr McDonnell will say: "The choice at this election is very clear on tax, as there is currently only one party which is committing not to raise taxes on middle and low earners – and that is the Labour Party.

"If Labour is elected next month we will guarantee that for the next five years there will be no tax rises for income tax payers earning less than £80,000 a year, no hikes in VAT and no changes in your national insurance contributions either.

"The Labour Party is now the party of low taxes for middle and low earners, while the Tories are the party of tax handouts for the super-rich and big corporations."

The Tories have attacked Labour over its tax plans
Image: The Tories have attacked Labour over its tax plans

Speaking on The Andrew Marr Show, he added: "Anyone earning below £80,000 will be guaranteed you will not have an increase in income tax, or VAT or national insurance contributions.

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"And for those above £80,000 we're asking them to pay a modest bit more. Why? To fund our public services.

"We're talking about modest increases so that we can have a society which we believe everyone shares the benefits of."

His announcement comes only days after the Chancellor Philip Hammond, who was forced to abandon his Budget increases in national insurance contributions, accused Labour of a tax and debt bombshell. Critics also say there are holes in Labour's plans.

Attacking the shadow chancellor's pledge, the Treasury Chief Secretary David Gauke said: "Jeremy Corbyn will have to raise taxes because his nonsensical economic ideas don't add up and he'll make a mess of the Brexit negotiations.

Susan Kramer addresses the Liberal Democrats on the Emergency Motion on Iraqat the Liberal Democrat Conference in Brighton.
Image: Lib Dem shadow chancellor Susan Kramer says her party will protect triple lock pensions

"That's why he talked about raising the basic rate of income tax to 25p in 2015 – and the Lib Dems and SNP, who would prop him up, want to increase taxes too. Every family and business would pay the price for the tax and debt bombshell they would drop on Britain."

The Liberal Democrats' shadow chancellor, Susan Kramer, said: "Labour's so-called tax pledges aren't worth the paper they're written on, given their inability to form a proper opposition, let alone a government."

After their own pledge to put a penny on income tax to fund the NHS and social care, the Lib Dems are now promising that pensioners will receive at least an extra £772 per year by 2021 under plans in their manifesto to protect the triple lock, which means pensions rise in line with earnings, prices or 2.5% (whichever is higher).

The party claims this guarantee means the state pension is expected to be worth at least £137.15 per week by 2021, up from £122.30 in 2017.

Lennon in action for Tottenham Hotspur in 2013
Image: Theresa May will outline new plans on mental health, a high-profile issue after it emerged Aaron Lennon has been suffering a stress-related illness

Commenting on the plan, Sir Vince Cable said: "Liberal Democrats believe that an important test of a civilised society is the way in which it cares for the elderly.

"The guiding principle of the pensions system must be to ensure that none are left unable to meet their basic needs for survival and participation in society, and that everyone is treated with the respect and dignity they deserve."

Theresa May's latest policy pledge is a major shake-up on mental health, now a high-profile issue after footballer Aaron Lennon was taken to hospital suffering from a stress-related illness and Prince Harry revealed he sought help for a mental health struggle brought on by the death of his mother Princess Diana.

  • Labour
  • Liberal Democrats
  • Tax
  • pensions
  • General Election 2017
  • Conservatives

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