November 30, 2019

John McDonnell admits that those on low incomes would pay higher taxes under Labour

Responding to John McDonnell, Rishi Sunak, Chief Secretary to the Treasury said:

“Labour have finally come clean about what their reckless tax plans will really mean for hardworking families and pensioners.
“Despite what they claim, under a Corbyn government everyone will be paying higher taxes to the tune of £2,400 extra each year.
“Every time a Labour government is put in charge of the economy they wreck it and it is always hard-pressed taxpayers who pay the price. They cannot be trusted to manage the economy. Only a majority Conservative government will cut taxes for millions and run the economy sensibly so that we can pay for the fantastic public services we rely on every single day.”

What you need to know:

  • Jeremy Corbyn’s Labour would spend an extra £1.2 trillion – enough to keep our NHS running for nine years. When taken over a five-year period, Labour’s 2017 Manifesto commitments added up to more than £600 billion. Since then, they’ve made over £590 billion of extra spending pledges (The Conservative Party, The Real Cost of a Labour Government, 10 November 2019).
  • Their plans would cost the average taxpayer £2,400 – the same as an average worker’s monthly pay. As new analysis shows that taxpayers would foot the bill for Jeremy Corbyn’s reckless spending – costing every taxpayer £2,400 a year – the equivalent to the average person’s monthly pay.
  • The IFS said Labour are ‘pretending that everything can be paid for by companies and the rich’ while in reality the cost will have to be shared more widely. ‘If you want to transform the scale and scope of the state then you need to be clear that the tax increases required to do that will need to be widely shared rather than pretending that everything can be paid for by companies and the rich’
  • Paul Johnson said Labour’s plans would lead us to having the ‘most punitive corporate tax system in the world’. ‘I haven’t looked in detail at all the numbers, but I reckon that will make this just about the most punitive corporate tax system in the world, certainly towards the top end. So I think that will be a very dramatic change in the way we tax corporates’.
  • John McDonnell admitted people outside of the top 5 per cent would be paying more tax under a Labour government. ‘On CGT and dividends, I think actually whether you earn income through work or you do it through investments you should be paying the same. And on that basis, I think you have a fairer system’ (John McDonnell, Money Box, 30 November 2019).

Region Labour's Pension Tax (£) Extra Months to Work
England 11,167 44
East Midlands 6,150 50
Greater London 12,871 45
North East 9,758 38
North West 6,835 47
South East 14,270 40
South West 7,407 45
West Midlands 10,729 41
Northern Ireland 13,718 35
Scotland 10,653 41
Wales 11,691 36
United Kingdom 11,253 43

Commenting, Therese Coffey, Secretary of State for the Department of Work and Pensions, said:

“Corbyn’s Pension Tax will see ten million savers facing a huge bill forcing them to delay their retirement for almost three and a half years.
“This is just one of the ways a Corbyn government would hammer hardworking people on top of his plans to hike up taxes by £2,400 a year, as well as the cost of his plan for unlimited immigration and the chaos of 2020 being dominated by two more referendums – one on Brexit and another on Scottish independence.
“Only Boris Johnson and the Conservative Party can get Brexit done with a deal, get parliament working again and turbocharge our economy to unleash Britain’s potential.”

Read more about how this Pension Tax will impact millions of savers (PDF)