CORBYN’S LA-LA-LAND ECONOMICS
He plans ‘wealth tax’ – yet won’t reveal how it would work He wants to slash rail fares – but doesn’t say how he’d pay for it And he could cut debt for all students in last 10 years – or even cancel it
JEREMY Corbyn was accused of ‘fantasy economics’ last night over plans to hit wealthier families to fund his manifesto giveaways.
The party is looking at a ‘wealth tax’ on the middle classes and an inheritance tax raid that could hit 26,000 families a year, it emerged yesterday.
Under other spending commitments, Mr Corbyn also suggested he may cut or even cancel student debt for anyone who has been to university in the past decade – as well as pledging to slash the price of rail tickets for commuters.
It came just a day after the Labour leader admitted he couldn’t remember the cost of a key childcare policy.
Asked in last night’s BBC TV debate whether his party’s manifesto sums on public services add up, Mr Corbyn replied: ‘I’m absolutely sure that they add up.’
But Home Secretary Amber rudd, who appeared instead of Theresa May, said: ‘I just have to take on some of Jeremy Corbyn’s fantasy economics.’
She said he was spending a ‘ magic money tree’ while handling Britain’s finances like Monopoly money.
Andrew Bridgen, Tory candidate for North-West Leicestershire, said last night: ‘It has been shown time and time again that Jeremy Corbyn’s funding commitments don’t add up. When it comes to inheritance tax and wealth taxes, how many times do Labour want to tax people on the same assets? It is La-La-Land Economics for the Corbynistas.’
It emerged yesterday that a Labour government would consider hitting the middle classes with a ‘wealth tax’ to pay for social care. The party’s manifesto said Mr Corbyn – who this week appears on the front page of music paper NME – would look at the idea of imposing the levy on higher earners to raise an extra £3billion a year.
The term ‘ wealth tax’ means a charge upon the value of investments, including property.
A leading think-tank said the plan could affect hundreds of thousands and could see some homeowners having to sell their home to pay huge tax bills.
Last night Labour said that even though it is listed as an ‘option’ in the manifesto, a wealth tax was not official party policy and it would only be introduced if there was cross-party consensus. The manifesto lists a series of other options, including asking businesses to pay more to pay for care, or the imposition of a ‘social care levy’. Any wealth tax would be on top of Labour’s plans to hit those earning £80,000 or more with higher income tax. The manifesto gives no indication of the rate that would be considered for a wealth tax or how many would be affected.
But in France an annual tax of between 0.5 and 1.5 per cent is charged on anyone with assets worth more than £1.1million – which can include property, cars, jewellery and even furniture. Five years ago, Shadow Chancellor John McDonnell suggested a oneoff 20 per cent wealth tax on the richest 10 per cent in Britain. Julian Jessop, of the Institute for Economic Affairs, yesterday said around 35 per cent of wealth is tied up in property, meaning the burden of a wealth tax would fall largely on homeowners.
He said: ‘Wealth taxes might appeal to some on principle but they are a bad idea in practice.
‘Most wealth is tied up in property or pensions, meaning many people would find it hard to pay a large tax bill without selling their homes or having less money to live on when they retire.’
The Labour manifesto said cash raised from a wealth tax would be used to fund a cap on the cost of social care, as well as free care for the terminally ill. A party spokesman said: ‘A wealth tax is not Labour policy and we have no plans to introduce a wealth tax. The Tories are levying a bigger wealth tax in the dementia tax.’
Last night the party also admitted it plans to hit tens of thousands more families with inheritance tax. The Tory budget of 2015 raised the threshold for couples to £1million by 2021 from its previous level of £650,000. But Labour has pledged to ‘reverse tax giveaways’ – and last night confirmed it meant the threshold would return to £650,000.
David Gauke, the Chief Secretary to the Treasury, said last night: ‘Jeremy Corbyn has made endless spending promises pretending there is a magical money tree, but the truth is families would pay for his hard-Left manifesto through higher taxes, more debt and a broken economy.’
‘He’s spending a magic money tree’