Labour’s tax plans ‘would not raise £4.5bn’

LABOUR’S election plans to raise taxes would “probably not” have raised as much as the party predicted because the richest would have found ways to avoid the levy, according to economists.

Critics had claimed Jeremy Corbyn’s intention to hit workers on more than £80,000 would backfire as they would take action to guard against the move.

The Institute for Fiscal Studies (IFS) said the policy, to reduce the threshold at which people started paying the 45p rate to £80,000 from £150,000, with a new 50p rate for people earning more than £123,000, would have generated cash for the Treasury but was unlikely to have raised the estimated £4.5billion expected. Most of the money generated would have come from those on incomes between £80,000 and £200,000 rather than the very rich because they were more likely to change their finances, it said.

The IFS said the high degree of responsiveness among the wealthy to make changes to deal with the additional 50 per cent tax rate in 2010 implied Labour’s proposals “would likely raise additional revenues, although probably not as much as Labour were claiming”.