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Robin Lustig Headshot

A Moral Case for Higher Taxes

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I have a dream. I'm sitting in a studio somewhere, interviewing a Captain of Industry about Labour's idea to bump the top rate of income tax back up to 50%.

"Captain: Ridiculous. Hugely damaging. Economic vandalism. Politics of envy.

"Me: So what difference would it make to you personally?

"Captain: Well, er, that's not the point, is it? It sends out the wrong message ... anti-business ... discourages investment ...

"Me: You'd still be able to afford family holidays overseas, even if you paid a few thousand pounds more in tax?"

"Captain: Yes, but ...

"Me: And you'd still be able to scrape together the school fees for your children's private education? Your wife wouldn't have to give up her 4x4? You'd just about manage to keep on the house in Provence?"

As I say, it's a dream. In a letter to the Telegraph last week, 24 Captains of Industry claimed that the re-introduction of a 50p top rate on income above £150,000 a year would be "a backwards step which would put the economic recovery at risk and would very quickly lead to the loss of jobs in Britain."

So let's just look at that for a moment. Jobs will be lost because bosses have to pay a bit more tax? How does that work? They're going to shut down factories, lay off staff, because they have to pay a bit more income tax? I don't think so.

Investors will tear up their business plans because they feel sorry for UK chief executives with fewer pounds in their pockets? Why on earth would they? It simply makes no sense - and voters know it. That's why there's a clear majority - including 40% of Conservative voters - in favour of the Labour idea.

Among the signatories to the Telegraph letter was Sir Stuart Rose, who used to run Marks and Spencer. When he started there as a management trainee in 1972, the top rate of income tax was 75%. Didn't exactly put him off starting the climb up the executive ladder, did it?

Trick question: what was the top rate of income tax during the first nine years of the Thatcher government? Answer: 60%. Was she lambasted by the titans of industry for her anti-business policies, for discouraging investment? Er, no.

Here are some more numbers for you to ponder: according to a report from the Tax Justice Network, between 1998 and 2011, the average pay of a chief executive of a FTSE-100 company rose by around 500%. In the same period, average pay for a worker in full-time employment rose by just 20% So, in little more than a decade, the ratio between the two has widened from 45:1 to 185:1. (Useful fact: about 99% of UK tax-payers have a taxable income below £150,000 a year.)

To talk about raising top levels of tax isn't the politics of envy. It's the politics of justice. I firmly believe that most people have an innate sense of what is fair - they don't expect chief executives and hospital porters to be paid the same, but they do expect that when people at the bottom are struggling to survive, then those at the top can properly be expected to give up something as well.

Can anyone genuinely argue that it is morally acceptable for bankers to be paid six-figure bonuses at a time when their banks are either losing shed-loads of money, or being fined billions for all manner of past skullduggery, or being supported by tax-payers (including, of course, hospital porters, care workers, and street cleaners)? This isn't about politics, or economics. It's about morality.

Can anyone argue that top earners like Sir Ian Cheshire, chief executive of Kingfisher, another of the Telegraph Captains (total calculated compensation last year: £2.6million), can't properly be asked to cough up a bit more in tax so that - perhaps - the Environment Agency can have some of its budget restored to enable it to protect the people of Somerset from catastrophic floods?

Does anyone think it is morally acceptable that food banks are struggling to meet unprecedented demand from people who can no longer afford to feed their families after having their benefits cut, while the top 1 per cent of earners scream blue murder at the prospect of having to shell out a bit more in tax?

Yes, I know there's an argument that increasing top rates of tax doesn't necessarily translate into increased tax revenues - because top earners (and their accountants) are remarkably adept at finding ways to wriggle round the rules. The evidence, from what I can see, is somewhat less clear than the anti-tax advocates would have you believe.

And one final point worthy of your consideration: there's plenty of evidence to show that countries with the highest income gaps also suffer the worst health records. It's not so much that poor people suffer worse health, but that where the gap between the poorest and the richest is widest, more people suffer ill health, even if they themselves are not living in poverty. So here's a slogan to campaign on: "Raise taxes. Help the NHS save money."

Wouldn't it be refreshing if someone came out and said it loud and clear: taxes are a necessary part of a fair and functioning society. If there's not enough cash to pay for essential social welfare programmes, for a modern transport network, decent schools and environmental protection, you don't always have to cut costs. Raising revenue is also an option.

Starting with those who can afford it most ...

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