UK Labor opposes tax cuts for the rich

By Andrew MacAskill and Alistair Smout

LIVERPOOL, England (Reuters) – Keir Starmer, leader of Britain’s Labor Party, pledged on Sunday to reverse the abolition of the top rate of income tax, saying tax cuts for the wealthy would not create economic growth as he strode for power at his party’s annual conference.

Starmer, who has led Britain’s main opposition party for the past two years, said he would reintroduce the top rate of income tax at 45% after the government scrapped the rate in a mini budget .

Labor suffered a landslide defeat in the last general election in 2019 and Starmer is under pressure to assert himself as prime minister-in-waiting with clear policies to challenge the ruling Tories.

The selection of Liz Truss as the new Tory leader on a tax cut package earlier this month immediately widened the ideological divide between Britain’s main parties.

“I see a very big political divide,” Starmer told the BBC.

“I don’t believe in this theory that only those at the top, the very wealthy, create and run our economy. It’s the workers of the whole country.”

Finance Minister Kwasi Kwarteng last week announced historic tax cuts, scrapped the cap on bankers’ bonuses and announced huge increases in borrowing in a budget statement that sent markets tumbling.

Starmer said a decision by Kwarteng to cut the top tax rate was ‘hugely divisive’ and unfair as it offered someone earning £1m ($1.09m) a tax cut of 55,000 pounds and would not affect others.

“I would reverse the decision they made,” Starmer said.

However, Starmer said a Labor government would not reverse the government’s decision to cut the basic rate of income tax from 20% to 19%, saying the tax cut would benefit workers.

Starmer said Labor would focus on renewable energy and “build the economy from the bottom up”, using the exact same phrase US President Joe Biden made in a tweet where he said he was “fed up and tired of the trickle-down economy”. “.

Asked about Biden’s remarks, Truss said, “I don’t really buy the premise” that his approach amounted to spillover economics.

“We encourage businesses to invest and we also help ordinary people pay their taxes,” Truss told CNN.

Kwarteng said he was focused on driving long-term growth, not short-term market moves, when challenged by the sharp drop in sterling and bond prices. He said there will be more tax cuts in the future.

“You don’t deal with people’s rising cost of living by taking more of their money in taxes,” Kwarteng told the BBC.

With the next election due in 2024, Starmer is proposing to move his party to the center and is preparing for a more ideological debate with Truss after his often character-driven clashes with his predecessor Boris Johnson.

Starmer has come under fire from some in his party for failing to set out clear policies to challenge the Tories, who have faced crises ranging from squalid to the highest inflation in four decades.

Labor is around 10 percentage points ahead of the Conservatives in opinion polls, but with the next election due in two years, some lawmakers have said the party should be further ahead.

Andy Burnham, the Mayor of Greater Manchester, said earlier that Labor should oppose any tax measures outlined by the new government.

Starmer led Labor members in tributes to the Queen and a rendition of the national anthem – the first time the song was sung at the party conference in recent memory.

Despite concerns that the chant would draw protests, the speech and anthem passed without any dissent.

Starmer said Labor was moving in the right direction and hope that the party would win the next election had turned into belief.

“I am very pleased with the progress we are making,” he said. “To now be in a position where it is believed that Labor will win the next general election is real progress for our party.”

(Reporting by Andrew MacAskill in Liverpool and Alistair Smout in London; Editing by Alexandra Hudson and Toby Chopra)

Copyright 2022 Thomson Reuters.

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