Corbyn’s tax raid would take Britain back to 1950s
JEREMY CORBYN was accused of planning to “bankrupt Britain” yesterday with a manifesto that would ramp up debt by £250billion and stage the biggest tax raid the country has ever seen.
The Labour leader announced plans for £48.6billion of extra annual spending commitments paid for by highearners and businesses that would saddle the country with its biggest tax burden since 1950.
His manifesto pledges were immediately picked apart by a leading economist, who suggested that the tax plans might only raise £20billion, leaving a £28.6billion annual shortfall.
Mr Corbyn, who revealed that he would nationalise the UK’S water companies, in addition to the railways, Royal Mail and National Grid, admitted that he could not give any figures for how much his Seventies-style nationalisation project would cost.
The 124-page manifesto, titled For the Many, Not the Few, claims to use a tax-and-spend model developed by “world-leading economists”, but a footnote reveals that one policy – an offshore company property levy – relies partly on calculations by the satirical magazine Private Eye.
And the official launch of the manifesto, a week after a draft copy was leaked, descended into farce as Mr Corbyn appeared to invent a new policy on the hoof and his shadow chancellor John Mcdonnell gave an incorrect figure for the size of the deficit.
The Conservatives described the document as “nonsensical”, while the Centre for Policy Studies think tank said it was “economically crazy”.
Meanwhile, Len Mccluskey, the boss of the Unite union and one of Mr Corbyn’s closest allies, wrote off Labour’s chances of winning the election and said holding on to 200 seats – a loss of 29 and its worst result since 1935 – would constitute “a successful campaign”.
If they win the election Labour will bring the threshold for the 45p tax rate down from £150,000 to £80,000, with a new 50p top rate kicking in at £123,000, affecting 1.3 million workers. It will mean an average annual increase of £5,300 for those who will pay it.
Corporation tax will increase from 19 per cent to 26 per cent and there will be a new excessive pay levy on companies paying employees more than £330,000.
With a clampdown on tax avoidance, an extension of stamp duty reserve tax, VAT on private school fees and other tax-raising measures, Labour claims it will raise £48.6billion. But the Institute for Fiscal Studies puts the figure at between £20 billion and £30 billion, leaving a shortfall of up to £28.6billion.
Economists have pointed to figures that show that increasing corporation tax (and income tax for high-earners) reduces the tax yield, as companies and individuals will try to avoid paying.
Paul Johnson, director of the IFS, said: “They are looking at raising an awful lot from companies and highearners. The chances of getting £50 billion are pretty small. It seems to us that if they were able to raise that amount that would take the tax burden in the UK to its highest level in 70 years.”
The tax burden – tax paid compared with total national income – could rise to about 37 per cent under Labour by 2022, higher than at any time since 1950, according to IFS estimates.
A Conservative source said: “Jeremy Corbyn’s plans will bankrupt Britain.”
John O’connell, chief executive of the Taxpayers’ Alliance, said: “This entire manifesto is based on the clearly absurd belief that businesses can be repeatedly hammered with massive tax increases and crippled with regulation without any wider impact on the economy, jobs and investment.
“If even a handful of these disastrous ideas were implemented it would mean misery for the many and employment for the few.”
At the launch in Bradford, Mr Corbyn said during a question-and-answer session that a freeze on benefits introduced last year would end under a Labour Government – a decision the House of Commons library estimated would cost around £14billion.
However, the manifesto contained no such commitment and an hour later the Labour leader was forced into an embarrassing about-turn, saying the party will not increase welfare payments across the board and would review the Conservative Government’s changes instead.
Earlier, Mr Mcdonnell was asked about his plans to add £250billion to Britain’s £1.5trillion national debt in a BBC radio interview yesterday.
Asked how big the budget deficit is, he said: “£68 to £70billion.” The actual figure is £52billion.
‘If even a handful of these disastrous ideas were implemented it would mean misery for the many and employment for the few’