Prime Minister David Cameron has responded to Labourís announcement yesterday that they would implement a 50p top tax bracket in 2015 by branding the policy ëvery badí for the economy.
Mr Cameron identified that any potential return to a higher tax bracket would significantly damage the inroads made by the current administration on Britainís economy, and pledged to lower tax rates should he win the General Election next year.
The Prime Ministerís remarks reiterate the sentiments of industry bosses, who all hit out at Shadow Chancellor Ed Balls suggestions of a 50% tax.
Labour previously implemented the top range tax back in 2010, but it was reduced by the current administration to 45% during spring last year.
Mr Cameron has outlined his intention to reduce tax rates rather than increase them, and accused Labour of using yet another populist policy to try and deceive the electorate.
“What George Osborne and I did was right for the economy but politically difficult. Labour is now doing something that is politically convenient but very, very bad for the economy,” he said.
ìAny 50p tax rate would be anti-business, anti-growth, and anti-enterprise” he added.
However, Labour have defended the policy, arguing that it is a necessary measure to cut the budget deficit that currently is far too high, and was part of a broader them of collective responsibility that the party was trying to adopt.
Shadow Business Secretary Chuka Umunna argued “Essentially his argument is that rich people, more wealthy people, in our country will work harder if you cut their taxes and yet he has put the taxes up for everybody else by, for example, whacking up VAT at the start of his premiership and cutting benefits for in-work families.”
And Shadow Chancellor Ed Balls said that it is fundamentally wrong that the countryís top earners are enjoying tax cuts whilst the working class fundamentally have to pay a higher amount of tax at their behest.
“I think a fair approach to deficit reduction means those with the broadest shoulders need to bear their share of the burden,” he said.
“I don’t think this is an anti-business move, I don’t think it’s bad for Britain. I think it is a fair way to get the deficit down.”
Labour leader Ed Miliband said: “It is utterly fair and utterly reasonable when ordinary families are seeing an unprecedented squeeze on their living standards to reverse the tax cut that this government gave to those earning over £150,000.
“It will help get the deficit down and reflects the principle of the British people: that those who have the broadest shoulders should bear the greatest burden.”
With the 2015 General election drawing ever closer each day, Labourís announcement is undeniably laced with populism and is most likely a calculated move to attract members of the electorate who will not share the same opinion as the countryís big businesses.
It is possible that an electorate split will begin to form, with the self employed and small business owners advocating the Tory policy of low tax rates whilst the working class will be fully in favour of higher tax payments for the countryís top earners.
Labour Leader Ed Miliband is publically trying to convey the image that the party stands for unity and collective financial responsibility for the people of the UK, which will draw widespread attention from those who currently resent the Toryís lack of action over the misconduct of big firms.
However, he is risking alienating current and prospective businessmen who will likely view a return to high spending and high taxation as harmful to their chances of success.
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