Assumption number one is that in an era of anti-politics everything has to be costed. So John McDonnell, the shadow chancellor, has insisted that current spending commitments have to be matched by tax increases: there is £48.6bn of pledged spending matched by £48.6bn of new taxes.
Assumption number two is that the public will wear tax increases because they will only be levied on companies and the better off. The gamble is that on tax, if not welfare or immigration, Britain has moved to the left over the past decade, with bubbling public anger at “fat cat” pay and the widening gap between rich and poor.
Almost half of Labour’s proposed tax increases come from corporation tax (£19.4bn) and another £6.4bn comes from a 45% income tax for those earning more than £80,000 a year and a 50% rate for those earning more than £123,000 a year. The Institute for Fiscal Studies estimates that those earning between £80,000 and £100,000 a year will be paying between zero and £1,000 in extra tax a year, while somebody earning between £123,000 and £150,000 will be paying between £2,725 and £5,425 more a year. That assumes that people don’t change the way they behave as a result of the higher taxes and that companies don’t shift their operations out of the UK.
Labour has made an allowance of £4bn for possible losses that might occur as a result of behavioural change, but on the side of the ledger has included £6.5bn from a crackdown on tax avoidance – a traditional recourse for politicians seeking to make their sums add up.
