Sunday 23 November 2008

Public will back tax fairness at the top - Tory voters included

The BBC is reporting that the pre-budget report will introduce a new tier of income tax of 45% on incomes above £100,000. The report suggests that may be introduced after the next General Election, given Labour's manifesto commitments on income tax.

I am sure that asking those who have done best to pay a little more will strike a chord with the public. This is something that is consistently and significantly underestimated in media and political discussion of taxation.

For example, YouGov carried out an equality poll in Autumn 2007 for the Fabian Society. This found that 67% supported a 50% top rate for earnings above £100,000, with only 25% opposing that. And remember, that two-thirds majority was for a more radical measure than looks set to be proposed, before any public case has been made, and before the shift in the economic climate.

What was most striking was that there was clear majority support across all parties, all classes, all ages and all regions.

Indeeed Tory voters were in favour of a higher top rate, by 55% to 40%, while that was 78% to 18% among Labour voters and 80% to 18% among LibDems.

ABC1 voters backed the measure by 68% to 26%, and C2DE voters by 67% to 24%.

Those earning over £50,000 backed a higher top rate by 57% to 39%, along with two-thirds of those in other income brackets. Those aged

There was 60% support in London, 67% in the rest of the South, 67% in the Midlands and 70% in the north.

The Fabian Society has consistently argued for a more open public debate about taxation and spending. The Fabian Tax Commission, under my predecessor Michael Jacobs, took on the idea that taxation should be a taboo topic in British politics, and provided much of the script for the national insurance increase to increase health spending. That was widely reported as a massive gamble. It was also New Labour's most popular budget - and probably the most important social democratic moment in British politics

But the Fabian Tax Commission's call for a new top rate was rebuffed. As, ahead of the last election, my call for the manifesto to omit the pledge not to raise income tax rates, and the call of the Fabian Life Chances Commission for more tax at the top as part of a strategy to meet the pledge to end child poverty.

Still, some commentators could find some signs that the debate was beginning to shift among Labour's next generation.

Others were more dismissive. John Rentoul regarded the joint advocacy of the Fabian Society and the ippr for a more open debate on taxation at the top as representing the "siren voices of Old Labour", insisting that:

Writing a New Labour election manifesto is easy. The first line is: "We will not raise the basic or top rates of income tax." That's what it said last time and the time before. It's negative. It's uninspiring. The party doesn't like it. But everyone knows that it has to be in there.

Not next time, though.

The Tories know what their gut instincts will tell them. But the Conservative leadership may also know that they are going to be on the wrong side of public opinion - and their own voters too - if they can not engineer another sharp handbrake turn tomorrow.

I don't know which way they will jump. But my (hesitant) prediction is that, despite internal wailing, their manifesto at the next election won't dare to oppose it.

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