I win 50p

John Rentoul

budget 300x225 I win 50pThe cut in the top rate of income tax from 50p in the pound to 45p, announced in 2012 and taking effect last year, was one of the big mistakes David Cameron and George Osborne made. That does not mean, however, that Ed Balls’s announcement last weekend that a Labour government would put the rate back up would do the opposition any good.

I have already collected my winnings from Dan Hodges, my fellow zombie Blairite, who bet me (50p, of course) that, even though he didn’t like the policy, Labour would get a short-term boost from Balls’s announcement.

I, on the other hand, think it right that the top rate should stay at 50p for as long as the fiscal emergency lasts. I accept that the importance of the rate is mostly declaratory, because the difference between 45p and 50p raises very little. But it is so important that the better-off both bear the brunt of balancing the books and be seen to be doing so that a little short-term sub-0ptimal economics is in order.

But I didn’t think that confirming the policy would move public opinion, and so it has proved. Partly, this is because Labour clobbering the rich was already in the market. The opinion polls already reflected people’s assumption, whether they agreed with it or not, that Labour wanted to tax the better-off more.

And partly it was because, no matter how popular the policy seems if you ask a simple opinion-poll question, attitudes are more complicated. My esteemed colleague Andrew Grice, in The Independent yesterday,* and my esteemed former colleague Peter Kellner, in The Sunday Times today (pay wall), explain why.

So the 50p rate is the right policy, but, if you think as Hodges and I both do that being six points ahead at this stage is nowhere near enough for Labour to win, it is no help in gaining those extra voters that Ed Miliband needs to offset the ones he is going to lose over the next 15 months.

*I think Grice has one historical detail wrong. He says that Gordon Brown wanted to impose a top rate of 50p in 1997. As I recall the debate, in which Tony Blair told Ed Balls to “wash your mouth out with soap”, it was over whether to keep open the option of such a rate in the future. Blair wanted to make the promise that the top rate would stay at 40p – a promise that Brown needlessly broke 30 days before the 2010 election.

Tagged in: ,
  • stonedwolf

    …not in this country.

    Denial of genocide is not a crime, be it Jew-hating idiots denying the holocaust, Turk nationalists denying the Armenian Genocide, Ricardo Lion denying the Israeli genocides at Sabra and Shatila, or John Rentoul denying the British-supported American genocide at Fallujah.

  • greggf

    Yes Pacific, he IS a cad and bounder.
    Normally he wouldn’t join anything so common as a protest group, but I’m sure he supports Friends of the Earth if only because his main chancers Cameron and Osbourne attended the FOE’s “The Big Ask” (a climate change love-in)!

  • peter prince

    I can’t believe that John Rentoul can seriously support this policy. Its a policy which will appeal to bottom rate tax payers and yet in practice will raise very little. It will simply discourage innovation to a certain extent as there would undoubtedly be a decrease in incentive to get paid that much even I believe just a 5p change would affect that and I think that the small rise in government income doesn’t outweigh the decrease incentive to earn as much. I mean if you are supporting a Brown policy while he was in power you are on some seriously shaking ground and I think the electorate will see through all these policies which sound good but don’t work in practice and in the end labour will suffer as a result. Even if they do get into government when these policies are implemented people will see the disaster they are it the long run it will be even worse for the labour party.

  • Anson Cleve

    Only for stuff that HE believes is “garbage”, naturally!

Property search
Browse by area

Latest from Independent journalists on Twitter