Cast your mind back to the heady days of 2012’s ‘omni-shambles’ budget and one thing stands out tall and proud: the government’s desire to lower the top rate of tax from 50 to 45p. Gone was the claim that we were “all in this together”, replaced with the idea that the rich would be protected whilst the poorest in society would be inflicted to ever heavier blows. Labour’s recent commitment to raising the top rate of tax isn’t simply for economic reasons (which are debateable) but to send the signal that a recovery built on the back of the weakest is no recovery at all. Committing to the 50p tax rate is committing to a symbol of fairness.
The symbolic value of the 50p tax rate shouldn’t be underestimated. As Cameron himself admitted before the election it sends the signal that – to use the oft-repeated phrase – those with the broadest shoulders should bear the greatest load. There is a very justifiable feeling throughout the country that government policy is punishing those at the bottom and the middle for a crisis they did not create whilst insulating those at the top from the storm that they unleashed. Labour’s commitment would go some way to addressing those concerns and is clearly popular with the public (60% of those polled support it) which makes the deafening opposition to the measure so perplexing.
The opposition isn’t just from who you’d expect. Of course Boris is against it, of course the Tories are against it, of course people who just so happen to be in top tax band are against it. But, so is the Labour peer Digby Jones who claims it will “kick the rich” and cause a mass exodus of our brightest and best.
The evidence for this is scant. Taxing 50% of all earnings over £150,000 isn’t an assault on the rich but is merely a polite request to make a small sacrifice to protect the poorest from further cuts. If the rich feel like they’re being “kicked” then I’m sure they can afford shin guards.
The poorest in society have seen their living standards slashed, their career prospects drastically limited and their income plummet. The coalition government has squeezed every saving possible out of them and still wants more without demanding any further sacrifice from the richest. George Osborne’s desire for a further £25bn in spending cuts (much of it from welfare) without any tax increases on the wealthiest is cruelty bordering on sadism.
Raising the top rate of tax won’t magically fix everything, but it’s a start and a combined effort of tax rises coupled with a genuine effort to clamp down on tax avoidance will yield impressive results. In a time of ongoing austerity the 50p tax rate won’t be a miracle worker. But it will be a symbol of fairness.