Beware of ‘conspiracy of silence’, Labor to tax middle class, says RUTH SUNDERLAND

What is left out of election manifestos is always as important as what is trumpeted.

This is the case with Labour’s attempt to woo voters with its promises about the economy.

First, let’s admit that the manifesto makes some reasonable points.

These include the observation that under the Conservatives there has been constant cutting and changing of business taxes. Corporate tax has changed 26 times. No wonder firms hesitate when making investment decisions.

Let’s also admit that some of the accusations leveled at Labor about taxes are probably unfounded. The party, for example, has denied it will go down the electorally suicidal route of imposing a capital gains tax on sales of family homes, as some Tories have suggested.

But there will be other bad tax increases.

As the Institute of Fiscal Studies points out, there is a ‘conspiracy of silence’ about the real situation in the country, with all three major parties complicit. To meet the targets for reducing the national debt, there will have to be tax increases or cuts in public spending.

This is an unpleasant message. The tax burden is now at its highest level since the 1940s and services are under severe strain.

Tax increases are already baked in the cake. Freezing allowances and thresholds that normally rise to keep pace with inflation will bring in an extra £11bn a year by 2028/29. Labor is not reversing this Tory policy.

If elected, Labor will almost certainly introduce huge tax increases in its first budget. This is what happened in 1992, 2010 and 2021 under the Tories and the Coalition.

With Labour, it is likely to involve a vindictive and counterproductive attack on the rich and also the middle class.

The Labor manifesto says nothing overt about wealth taxes.

But it’s an idea that’s gaining traction in liberal/leftist circles. He is involved in the Green Party agenda, and Gary Stevenson, the self-proclaimed YouTube economics guru, is a lawyer.

The revenue-raising plans mentioned in the Labor manifesto – aimed at non-homemakers, private schools and private equity barons – point clearly in that direction.

Many, myself included, have no sympathy for the private equity asset strippers who gobble up UK companies while paying very little tax. But attacking them now, when the City is losing its status as a global financial center, is ill-timed.

While it’s all very well for Labor’s class warriors to set out to punish the rich, this is merely a softening exercise for an all-out assault on the middle classes.

Retirement could be productive for Reeves. It could cut tax relief for higher earners or go after the overall tax-free amount.

She has – for the time being – moved away from restoring the lifetime pension allowance. This penalized moderately wealthy savers, such as doctors or executives, with a super tax if their investments performed well.

Reeves and her boss Sir Keir Starmer claim there is a way to balance the books without raising taxes, avoiding the debt target or cutting services: growth.

Wouldn’t that be great? Yes, but growth takes time, perhaps five or ten years unless the country enjoys a stroke of luck – the equivalent of finding North Sea oil, say.

The problem is that luck works both ways. We could just as easily have another shock like Covid.

In any case, the socialist intersection does not constitute an economic policy. Hold on to yourself.

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