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320,000 people, or the top 1% of earners pay half of their over £150,000 income to the Treasury. Many of these people are wealthy enough that they can afford measures to legally avoid tax, or even take their bank accounts offshore.

The 50p rate of tax does not work for two reasons.

Firstly, if as the IFS reports, the top rate of tax is causing a £500m net loss to the UK Treasury.

Tax payers money, and money from those earning less than a tenth of the top rate threshold, is spent on enforcing the 50p rate of tax.

That is a potential half a billion pound loss to the Treasury.

£500m that could be spent on teachers, doctors and nurses. Money that could be spent on Sure Start, Building Schools for the Future, or a cut in VAT to help hard working families.

Secondly – The other 99% of people aspire to be part of that 1%.The 50p rate of tax is a disincentive to those who seek to grow their small business, create jobs and train young people.

Cutting the top rate of tax would stimulate growth amongst wealth creators in Britain. Profit can be a powerful motivator, and a potent tool for helping the poorest in society especially where both owner and worker receive a fair deal.

In 1997, the New Labour manifesto pledged that: “There will be no increase in the basic or top rates of income tax”.

This is a pledge that should be made by Labour once again.

By saying that Labour would not raise income tax once again, we would avoid the gesture politics that plagued the Party in the 1980s.

Other measures which are economically efficient, and raise more money for the Treasury should instead be considered. An increase in inheritance tax, combined with an increase of the threshold or a land value tax which cannot be avoided. Both of these measures would ensure that Britain remains competitive in the global economy.

Liberal Democrat President, Tim Farron said this to the Liberal Democrat Conference in Birmingham:

“Are we all in this together? Well, not if we give tax cuts to the rich!

“At a time when 90% of the country is struggling to pay the rent or mortgage, giving a 10p tax cut to those who need it the least, would not just be economically witless, it would be morally repugnant.

“Now of course, all income tax is temporary!

“Income tax was introduced as a temporary measure in 1798 during the Napoleonic wars.

“So my solemn promise to you is that we will get rid of this temporary measure, as soon as we stop falling out with the French.”

Supporting symbolic measures such as the 50p rate, which are economically inefficient and harm the UK economy is a shared by many in the Labour Party, and it is in some ways appealing.

It is not realistic.

If Labour is to prove, as in 1997, that we understand aspiration and are serious about promoting growth and jobs, and providing opportunities for all in society, we should pledge to abolish the 50p rate of tax.

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