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Labour calls for targeted tax rises to address the deficit

Targeted tax rises should be doing more work in reducing the deficit, according to Shadow Chancellor Alan Johnson.

Giving his first major speech in his new role at the London offices of KPMG today, Johnson said growth is vital to the recovery and that spending cuts hit growth twice as hard as a tax increase.

He said: “My view is that specific, targeted tax changes need to do more of the work. We know from the Office for Budget Responsibility’s own figures that a spending cut hits growth twice as hard as a tax change – three times as hard when it is capital spending.”

He added: “We will work with the Government where it brings forward targeted tax rises that do not affect low and middle income families. If they follow our advice and stick to halving the deficit by 2013/14, such tax changes would allow greater protection for public services.”

Johnson cited a PricewaterhouseCoopers report which forecasts one million jobs will be lost due to the Government’s austerity measures.

He said: “A rising dole queue means a bigger welfare bill. And less tax coming in.”

He said Labour supports the rise in Capital Gains Tax, announced in the emergency Budget, but said the £2.4bn levy on banks was not enough. He said a bonus tax, proposed by former Chancellor Alistair Darling, alongside a bank levy would provide £7.5bn to the Government by the end of this Parliament.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. How utterley profound from a man with no experience in economics and part of the disastourous rabble that failed to regulate the banks properly, and wasted billions of taxpayers money in their 13 years of so called government.

    This man and his party should be barred from ever forming a government again due to crass incompetence.

  2. With reference to the penultimate paragraph ,surely handing out dolls rather than cash must save money?

  3. John Szymanowski 18th October 2010 at 5:24 pm

    Johnson ,as we all know is an economic illiterate -how can an ex postman who left school with no academic qualifications, and who, by his own admission needs an ‘economic primer’ ,be shadow chancellor?
    The answer is David Miliband does not want Ed Balls or Yvette Cooper to be in the second most powerful shadow job as they could easily rival him a la Gordon Brown and Tony Blair.

  4. I couldn’t have put it better myself!

    Plus he’s simply pandering to the core Labour vote, who almost certainly don’t understand the issues and simply listen to diatribes like this, believing them to be Gospel truth.

  5. Darren Lang-Whiston 19th October 2010 at 9:36 am

    I would agree with the 2nd anonomous comment except for the fact that it is Ed Miliband who is now the Labour leader, not David.
    I’m sure the unqualified postman wouldn’t have made such a glaring error.

  6. we have to be careful on how we cut this deficit,so lets not all think we have the correct solutions because you are fooling your self if you think this is going to be so straight forward….think about what you are going to do in a higher inflationary period,or a deflationary period like the Japanese have been in for almost 2 decades and what about stagflation can you as individuals tackle these situations when they arise…I am sorry to modt of you will not even know where to begin.

  7. Where to begin ? Easy, take a hatchet to the huge waste in the public sector. As in most big organizations, 20% of the people do 80% of the work whilst the other 80% go to meetings, are on sick leave, maternity leave, on holiday, on fact-finding missions, having a coffee break, extended lunch, ill-health early retirement, on a seminar or conference, etc etc etc

  8. I think the idea of targeted tax rises is an excellent idea.

    First we should target the former Labour MP’s who firstly allowed the banks to run riot and secondly spent tax revenue like it was going out of fashion.

  9. About time that the well heeled shared their contribution to society, after all we are “all in it together”!
    Strange how Anonymous contributors deride the previous administration who managed the economy well for ten years but where blown off course (as were all other economy’s) in the last three years. Very selective opinions. Even the Conservatives where forced to admit those facts.

    As for the statement about a former postman knowing nothing about economics, well how short sighted can you get. I remember a lab technician who became Prime Minister and she too knew nothing about economics but everybody has to start somewhere.

    Tax hikes for the super rich should be welcome, is it fair that a millionaire is awarded a 5% payrise and after tax at 50% still nets £25000 when a person on average income of say £20,000 nets only £800

    Michael Caine said before the election if the Government raises taxes on the rich then he will leave the UK. Bye Bye Michael

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