Labour has set out how it will raise an eye-watering £83bn in new taxes – mainly from the rich and large companies – to prove its ambitious spending plans are fully-funded.
The move, in an exhaustive 44-page document, also piles pressure on Boris Johnson to do the same – after independent experts warned his spending splurge would also require higher taxes.
The party’s general election manifesto also unveiled a one-off windfall tax on oil and gas companies that “knowingly damaged our climate”, expected to raise £11bn, to pay for the switch to green economy.
It says Labour will, by 2023-24, raise:
* £5.4bn from higher income tax on the richest 5 per cent – the 45p rate would kick for incomes above £80,000, with a new 50p rate on those above £125,000.
* £30bn from tax hikes on big companies – by putting corporation tax back up to 26 per cent and through a new “tax on multinationals”.
* £8.8bn from a new financial transactions tax on the City of London – which Labour argues can be introduced without international agreement.
* £6.2bn from tackling tax avoidance and evasion.
* £8.3bn from closing down reliefs on corporate tax and research and development.
The measures are needed because Labour plans to spend an extra £135bn a year if it wins power – dwarfing the £70bn planned in 2017.
Jonathan Ashworth, the shadow health secretary, defended the scale of tax hikes, saying: “I think that is only fair enough when you have teachers begging for donations now and some schools going to a 4-day week because they cannot fund their education.
“We have had huge cuts in corporation tax under the Conservatives and normal people are not feeling the benefit of that. This is not radical by the standards of our competitors and neighbours.”
Mr Ashworth rejected claims that companies would flee the UK to avoid higher tax as “unpatriotic”, adding: “I don’t think they would do that
“The British people are hard-working and entrepreneurial and I think big corporations are going to want to invest in the British economy.”
But the Institute for Fiscal Studies said it was “simply not credible” for Labour to raise £83bn simply from companies and people earning over £80,000 a year.
“You cannot raise that kind of money in our tax system without affecting individuals," said Paul Johnson, its director.
He said: “It’s impossible to overstate just how extraordinary this manifesto in terms of the sheer scale of money being spent and raised through the tax system.”