WE HAVE SEEN A HUGE INCREASE in inequality in Britain since 1979, the year Thatcher was elected. Labour is committed to reverse that process. They are opposed by the Tories (naturally) and bodies like the Institute of Fiscal Studies (IFS) which pretends to be a bunch of impartial economic bean counters. Can Labour narrow the gap between rich and poor?
When the IFS accused Labour of dishonesty the mask of objectivity slipped. “The shame of the two big parties’ manifestos is that neither sets out an honest set of choices... For Labour we can have pretty much everything - free [higher education], free childcare, more spending on pay, health, infrastructure. And the pretence is that can all be funded by faceless corporations and ‘the rich’.”
Labour’s commitment remains that £48.6bn will be raised by taxes on corporations and the rich to match our spending commitments, and 95% of us won’t pay a penny more. The figures were set out and carefully costed in a document called Funding Britain’s Future.
Thatcher inherited a top rate of income tax of 83%. The following year she cut it to 60%. Successive Tory governments favouring the rich have edged the top rate down to 45%. Why should it be impossible for a Labour government to raise it to 50p, as Labour’s manifesto proposes?
Similarly with corporation tax: in 2010 it stood at 28%. The Tories have cut it to 19% and it is due to fall further to 17% by 2020. Why shouldn’t Labour put it back up to 26%?
The Tories and the IFS argue that higher tax rates will act as a disincentive, so rich people won’t work as hard and corporations won’t invest if they are taxed more. Hang on. Did anyone notice the investment surge when corporation tax was cut by the Tories? Did the economy get a boost as rich people worked harder when the top rate of income tax was cut? No, these were just gifts by the Tories to the rich and their big business backers.
In the longer term, the right wing argues, the rich have a better chance to avoid tax. That is true. The difference is that a Corbyn-led Labour government would be on the side of ordinary working people, not servants of the tax-dodging rich and powerful like the Tories. We’d take them on.
Then the IFS and the Tories criticise Labour’s fantastic pledge to raise the minimum wage to £10 per hour by 2020, lifting millions out of in-work poverty in the process. It’ll cause a loss of jobs, they assert.
We’ve been here before. When Labour originally proposed a national minimum wage the then Tory leader Michael Howard, speaking from the heights of economic orthodoxy, described it as “a piece of staggering economic illiteracy.” He predicted it would cause “between one and two million more unemployed.” It didn’t happen. He was only between one and two million out in his prediction!
Don’t listen to them. Labour under Corbyn can and will campaign for a better and more equal society.