No doubt over the next three months we will hear the phrase “tax cuts for millionaires” from Labour rather more times than we need to.
I figured it was worth noting the records of the Labour government and the Coalition with respect to the taxation of high earners.
The higher rate for income tax was set at 40% by Nigel Lawson in 1988 and it came into force on 6th April 1988. It remained unchanged for 22 years, 13 years of which were Labour years. So Labour had a 40% rate for almost 4 years longer than the Thatcher/Major governments did.
On April 6th 2010 a new 50% additional rate for those earning £150,000 was introduced by Alistair Darling as a trap for the Conservatives. After almost 13 years of thinking that the correct higher rate to promote economic growth in the UK was 40%, the Labour party introduced a 50% rate purely for party political reasons. The rate didn’t raise any significant additional tax income. It just “sent a signal”. The wrong signal. This rate was in place for one month before the Labour government left power. One month in thirteen years.
The Coalition reduced this rate to 45% in 2013 causing paroxysms of faux rage from Labour. The Coalition had a 50% rate for 2 years and 11 months. By the next election it will have had a 45% rate for two years and one month. The Coalition has had a 50% rate for 35 times longer than Labour.