LABOUR PLAN HIGHE Leading think tank accuses party of dishonesty over manifesto pledges Tories are

LABOUR will raise taxes to their highest level since just after the Second World War – and ordinary families will take a hit, economists said yesterday.

In a damning assessment of Jeremy Corbyn’s manifesto wish-list, the Institute for Fiscal Studies said the party should drop the pretence that tax rises were victimless and everything can be paid for by ‘someone else’.

It warns that swingeing tax increases on business will make a broad group of people worse off by hitting wages and pushing up prices.

The think tank said Labour’s manifesto would put the tax burden up to the highest level since 1949. And because the party’s measures are likely to raise at least £9billion a year less than Labour hopes, it is very likely that taxes would have to rise still further.

The IFS said neither of the two main parties’ manifestos sets out an ‘honest set of choices’, but is more critical of Labour’s.

It accused Labour of not being candid with the British people about the cost of its policies, concluding:

Its spending promises would leave the deficit £37billion higher than under the Tories by 2022, and debt will not fall by much, if at all.

Cancelling planned rises in the pension age will cost £30billion a year more by the middle of the century compared to current plans.

Putting the minimum wage up to £10 an hour will put jobs at risk and will mean that more than a quarter of all private sector workers will have their pay set by Whitehall.

Scrapping tuition fees would benefit the middle classes and could mean fewer going to university overall.

Increasing corporation tax could hit private investment and would be dangerous given the uncertainties over Brexit.

Ramping up investment so quickly by hundreds of billions runs the risk of huge waste.

Labour made mistakes in calculating how much it would raise through its tax avoidance measures.

Corporation tax rises could reduce the value of private pension pots.

The IFS said Mr Corbyn’s policy plans would lead to the long- est period of sustained public spending for 30 years, and the highest level of tax receipts compared to GDP since 1949.

Deputy director Carl Emmerson said it was a pretence that only the corporations and the rich would pay.

Tax increases could be economically damaging because they would hit private investment, which could bring down wages and the number of jobs.

A spokesman for the think tank said: ‘ Labour would not raise as much money as they claim even in the short run, let alone the long run.

‘And there is no way that tens of billions of pounds of tax rises would affect only a small group at the very top as their rhetoric suggests. If they want the advantages of a bigger state they should be willing to candidly set out the consequences – higher taxation affecting broad segments of the population.’

Mr Emmerson said Labour’s policy of funding higher education, childcare, schools, health and welfare by taxing solely the rich and companies ‘would not happen’. The party’s identification of £49billion a year of tax increases was an overestimate by at least £9billion.

‘The big increases in corporate taxes they propose would still make a broad group of people worse off just as surely as would increases in VAT or the standard rates of income tax,’ he said.

‘When businesses pay tax, they are handing over money that would otherwise have ended up with people, and not only rich ones. Millions with pension funds are effectively shareholders. In the longer term, much of the cost is likely to be passed to workers through lower wages or consumers in higher prices.

‘ That isn’t to say that we shouldn’t tax businesses. But we shouldn’t pretend that it is somehow victimless and hence fundamentally different from personal taxation. The impacts on households are just less transparent.’

He added: ‘There is a case to be made for a bigger state. But the case needs to be made with honesty about what it would mean for tax payments, not by pretending that everything can be paid for by “someone else”.

‘If they were to embark on this set of spending increases some increase in taxes other than those mentioned in the manifesto looks likely.’

Mr Emmerson concluded: ‘Labour are not merely asking for a bit more from the top 5 per cent whilst leaving “ordinary households” alone. There is no

‘Economically damaging’

way that the tens of billions of pounds of tax rises they promise would be borne entirely by such a small group. If only policymaking were that easy.

‘The Labour manifesto comes with two big risks. The first is that they might well not raise anything like the tax revenues they want. The second is that some of the proposed tax increases, alongside the very big increase in the minimum wage, and other labour market regulation, would turn out to be economically damaging.’

Mr Corbyn last night denied that his plans would lead to the highest taxation since just after the Second World War.

He told Andrew Neil on BBC One: ‘ The level of corporation tax we’re proposing would be 26 per cent, which is actually less than it was in 2010.’

Shadow chancellor John McDonnell said: ‘We believe the IFS has underestimated the revenue raising effectiveness of some of the tax changes we would make, but we recognise the potential for uncertainty which is why we have allowed headroom in our plans.’

But David Gauke, Chief Secretary to the Treasury, said: ‘This is a devastating analysis of Jeremy Corbyn’s manifesto.

‘It is simply not worth taking the risk of him being in charge of our economic security and Brexit negotiations.’