Keir Starmer Commits To Reversing Government Scrapping Of 45p Top Tax Rate
Labour leader Sir Keir Starmer has committed to reversing the Government's cut to the top rate of income tax (Alamy)
Labour leader Sir Keir Starmer has said he would reverse the decision to abolish the top rate of income tax, but would keep the Government’s planned cut to the basic rate.
On Friday, Chancellor Kwasi Kwarteng announced that the 45p rate – paid on earnings over £150,000 – was being scrapped as part of the Government’s much-anticipated growth plan.
He claimed the move would help turbo-charge the economy, however Starmer committed to reintroducing the tax bracket, and said that he does not think “that the choice to have tax cuts for those that are earning hundreds of thousands of pounds is the right choice.”
The higher rate is only paid by the 629,000 people earning above the highest threshold in the UK. According to Treasury officials, the change will mean that the highest earners could see their tax cut by around £10,000-per-year.
Speaking in Liverpool, where Labour are hosting their annual autumn conference, Starmer told the BBC’s Laura Kuenssberg this morning: “People are struggling in the way they are and our public services are on their knees so it is the wrong choice.
“I would reverse the decision that they made on Friday, be absolutely clear about that.
“The effect of that decision was, if you're earning £1,000,000, you've got £55,000 in tax cuts as a result of that decision on Friday.
“That's enough, more than enough, to employ a nurse.
“I don't think many people watching this programme say that is fair, that is the way to grow our country.
“It is hugely risky, it's hugely divisive, and I would reverse it.”
During Friday’s fiscal event, Kwarteng also brought forward the planned cut to the basic rate to 19p by a year, announcing it would take effect from April 2023, a move Starmer backed and said he would maintain as he said he has “long made the argument that we should reduce the tax burden on working people”.
He added: “We need to recognise who grows this economy.
“It is those people, the software workers, those working in the factories, those in our schools, training people, those in our hospitals keeping people going, they're the people who really grow the economy, and they're entitled to benefit from that growth.
“So I would grow the economy from the bottom up and the middle out to reflect the reality of our country.”
The eye-catching measure of the top rate cut on Friday was the centrepiece of Friday's substantial overhaul of the UK's tax system promised by new prime minister Liz Truss.
The reforms also include slashing Stamp Duty rates and reversing the planned National Insurance Contribution rise.
Kwarteng told the BBC that the policies laid out on Friday benefit "people right across the income scale".
"We've actually put more money into people's pockets, he said.
"That's why we've reversed the National Insurance increase, which I think was was not a good policy and [...] also we're bringing forward the cut in the basic rate and there's more to come."
He added: "I want to see over the next year people retain more of their income, because I believe that it's the British people that are going to drive this economy."
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