Labour returns to familiar territory

TO `squeeze the rich until the pips squeak' is a good old-fashioned Socialist doctrine, which has once again embroiled the Labour Party in a row that threatens their very existence in Government.

TO `squeeze the rich until the pips squeak' is a good old-fashioned Socialist doctrine, which has once again embroiled the Labour Party in a row that threatens their very existence in Government.

Tony Blair and Gordon Brown were apoplectic with rage when maverick Cabinet minister Peter Hain suggested that taxes might have to rise to pay for public services.

Former Liberal Mr Hain, who has been busily negotiating away British sovereignty in the proposed European constitution so be-loved by Eurofederalists and the intelligensia on the left, had to rewrite a speech on the orders of the Prime Minister last Friday when he suggested a tax hike for high earners.

Mr Blair even had to break off from the European Union summit in Greece to slap down the Commons leader and declare that there would be no increase in the top rate of tax.


You may also want to watch:


The decision by Mr Blair and Mr Brown in the 1997 election manifesto – repeated in 2001 – to commit "New Labour" not to raise the top rate of tax was seen as emblematic of the changes to the party pushed through by Mr Blair.

Now former Cabinet minister Peter Mandelson, one of New Labour's chief architects, has entered the controversy. "If you want to continue the transformation of your welfare system, both to extend its embrace and raise its standards, then obviously the question arises as to how you will fund that."

Most Read

And the very Blairite former transport secretary Stephen Byers said that while the overall tax burden was "about right,", the Government could He said that there was a "real issue" about the number of middle income earners caught by the top 40% rate of tax.

In other words, raise the £35,000 level on which the higher tax is paid, and pile it on top entrepreneurs, the high earners in the City of London and the mega rich with a new 50-60% tax band.

Such redistribution sounds perfectly reasonable to most people – but the Prime Minister is desperate to keep the votes of the well-off who deserted the Tories in droves.

It would make more sense if the Prime Minister started to understand the real anger that has erupted over the federalist European constitution, education funding, and the soaring prices and worsening services on the nation's railways. Tens of thousands more people are likely to chuck Labour at the next election over these issues than the relatively small number of voters who are perfectly able to pay higher taxes.

Mr Blair now has another potentially explosive tax issue – the Social Market Foundation said the Government should impose a capital gains tax of 40% on any profit people made on their property through house price rises, and even an annual property tax of a proportion of a property's value.

Thus on a house bought for £90,000 14 years ago and sold today for £250,000 would attract £64,000 CGT, reducing the money available to buy another property and thus eliminating price volatility.

Sounds great in theory – but as it would reduce the value of housing overnight, putting tens of thousands of voters in an immediate poverty trap, no government would dare introduce such a measure.

.

Become a Supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Become a Supporter