Over the weekend, John McDonnell promised that Income Tax would not rise for most of the country but that a higher rate would be levied on those earning more than £80,000. Tax reform can be pretty technical; and so one needs to look at one or two things without losing sight of the idea that the richer should pay their share. Each tax payer has a personal allowance of £11,500 i.e. the first £11,500 of earnings is not taxed; this is clawed back if one’s income is £100,00 or more by levying a 60% marginal rate on those earning between £100,000 and £121,200. There is probably enough room for a new additional rate between the 40% levied at £42,000 and 60% levied at £100,000 and £80,000 p.a. is a lot of money; only 3% of income earners get that much. It will remain necessary to increase the amount paid by those earning more than £145,000 and redress the regressive nature of National Insurance, which negates much of the 20% band, converting it into a 32% tax burden. Labour’s promise is also that there will be no increase in employee NICs nor in VAT, although again that’s not enough … VAT has to come down from 20%.
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In my report back from Labour Party Conference, I predicted that the fault lines caused by the Brexit Referendum would become a potential fatal debate for the Labour Party. Today the Independent reported on a speech by John McDonnell, in which he argued that Labour would not oppose an Article 50 bill and would use moral pressure to ensure that the Brexit terms negotiated were acceptable to Labour. Jolyen Maugham argues in the New Statesman that promising not to oppose Article 50, or not to amend it disarms the PLP, it will have no leverage on the Tories who are still putting the interests of their party before that of the country.