Labour’s threat to YOUR pen­sion

£24bn hike in cor­po­ra­tion tax £9bn raid on div­i­dends Ma­jor firms to be na­tion­alised State to seize 10pc of shares

Scottish Daily Mail - - City & Finance - by Tom Witherow

LABOUR has de­clared war on pen­sions with a raft of mea­sures that will hit mil­lions of fam­i­lies’ nest eggs.

Tax rises, the seizure of com­pany shares and plans to na­tion­alise vast swathes of the econ­omy will de­press the value of stock mar­ket in­vest­ments, ac­cord­ing to ex­perts.

And mil­lions of savers with a pen­sion – not just the wealth­i­est in so­ci­ety – will feel the pain.

Labour has claimed its tax rises will hit only the best-paid 5pc of work­ers – those earn­ing more than £80,000 a year. But just £5.4bn of the £83bn that Labour plans to raise to fund its spend­ing prom­ises comes from in­creas­ing in­come tax on high earn­ers.

Ac­cord­ing to Labour’s own fig­ures, an­other £23.7bn comes from rais­ing cor­po­ra­tion tax from 19pc to 26pc, while a fur­ther £9bn comes from higher taxes on div­i­dends.

Torsten Bell, chief ex­ec­u­tive of think­tank Res­o­lu­tion Foun­da­tion, said: ‘Far more than the top 5pc of the work­force will be af­fected. As an ex­am­ple, higher cor­po­ra­tion and div­i­dend tax­a­tion will have a ma­te­rial ef­fect on de­fined con­tri­bu­tion pen­sion schemes.’

As well as hik­ing taxes, Jeremy Cor­byn and John Mc­Don­nell (pic­tured) plan to na­tion­alise the rail­ways, wa­ter com­pa­nies, en­ergy firms, Royal Mail and the broad­band arm of BT.

Labour will also take con­trol of 10pc of all the largest com­pa­nies in a move la­belled ‘dra­co­nian’ that is likely to alarm for­eign in­vestors, lead­ing to share prices drop­ping fur­ther.

Adrian Low­cock, head of per­sonal in­vest­ing at in­vest­ment plat­form Wil­lis Owen, said the com­bi­na­tion of poli­cies was ‘very neg­a­tive for UK plc’ and in turn the value of pen­sions.

He said: ‘These poli­cies could sig­nif­i­cantly im­pact ex­ist­ing savers and in­vestors, as well as af­fect peo­ple’s pen­sion sav­ings.’

Matt Kil­coyne, of think-tank the Adam Smith In­sti­tute, said: ‘Labour’s heavy busi­ness taxes will see com­pa­nies slam the brakes on in­vest­ment, lead­ing to lower pro­duc­tiv­ity and wages, and the party’s tax grabs are an at­tack on pen­sion sav­ings. These poli­cies will leave some of us worse off straight away and all of us poorer in the long run.’

Div­i­dends are cur­rently taxed at a lower rate than in­come. But in a move that will hit en­trepreneur­s and the self-em­ployed who pay them­selves through div­i­dends, as well as savers with money in the stock mar­ket, Labour plans to align div­i­dend tax and in­come tax. It is also plan­ning to hike cap­i­tal gains tax. ‘Labour will tax cap­i­tal gains at the same level as in­come tax and abol­ish the lower in­come tax rate for div­i­dend in­come,’ it said in its man­i­festo.

Along with hikes in cor­po­ra­tion tax, it is feared this will make Bri­tain a less at­trac­tive place to in­vest, de­press­ing share prices and hit­ting the value of sav­ings and pen­sions. Plans to seize 10pc of shares in any firm with more than 250 staff – in or­der to pay work­ers div­i­dends of up to £500 each – are also likely to cast a shadow over the UK as a good place to in­vest. And Labour has re­peat­edly said it would not pay mar­ket value for com­pa­nies it plans to na­tion­alise.

Nigel Peaple of the Pen­sions And Life­time As­so­ci­a­tion said: ‘If a Labour Gov­ern­ment failed to pay full com­pen­sa­tion for any com­pa­nies it took own­er­ship of, mil­lions of work­place pen­sion savers in the UK could see the value of their pen­sion funds hit di­rectly.’

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