Senior Labour MP Frank Dobson says the top rate of income tax should be “at least 50p” in order to raise more money from wealthy individuals.
Speaking in a debate on the Finance Bill in the House of Commons yesterday, Dobson, who served as Health Secretary under Tony Blair, attacked bankers’ pay and the Government’s decision to cut the top rate of income tax to 45p.
He said: “[It] is particularly irksome for badly off people in this country to hear apologists for the City talking about bankers’ compensation packages—compensation apparently for the horrid requirement that they turn up at work. The dictionary definition of compensation is “recompense for loss, suffering or injury”.
“Those bankers—how they suffer when they are helping people to swindle their tax liabilities; laundering money for gun runners or drug runners; or fiddling money to help people evade sanctions and then having to pay up. We clearly need to ensure that those rich people pay more tax, and the only way to do that is by increasing the rate to at least 50p.”
He added: “We constantly hear from those on the Tory benches about the wonders of Mrs Thatcher and how we should follow her example, so I remind them that for 9 of the 11 years that she was Prime Minister, the top rate of income tax was 60p in the pound. Apparently, people managed to pay it. Apparently the money came in, and even rich people did not need a greater incentive to turn up at work.”
Responding for the Government, Treasury exchequer secretary David Gauke said: ”I suspect that he speaks for many of his colleagues in that regard. The fact is that there is an ideological divide involved here, in that the opposition want the higher rate, regardless of the practicalities.”
Dobson also attacked the Government’s “ignorant” resistance to “sensible” proposals for a Financial Transactions Tax.
In April, the European Court of Justice rejected a legal challenge from the UK against 11 EU member states introducing the levy through a process known as ‘enhanced cooperation’.
The British Government lodged the complaint in an effort to stop 11 EU member states, including France and Germany setting up the tax which the UK fears will tax UK firms and transactions.
Dobson said he has repeatedly asked the Treasury for estimates it had made about the potential impact of the tax, but has received nothing.
He said: “Having never made any estimate of the possible income—and apparently never estimating what it would cost the City of London—the Treasury nevertheless states that it would be fatal for the City to impose a tax of 0.05 per cent on financial transactions, when every other business in the country pays a 20 per cent tax on transactions known as VAT.”