The Tory leadership contest has rapidly descended into a race to the bottom with a frantic series of hastily devised pledges about cutting taxes in a desperate effort to secure support.
Former Brexit Secretary Dominic Raab has promised to slash basic rate of income tax by 5p over five years. Jeremy Hunt has proposed a bung for big business by cutting corporation tax to 12.5%. That’s under half of Luxembourg’s corporation tax rate of 26% and significantly less than the US rate of 21%.
And today, in the latest of these cynical and reckless giveaways, frontrunner Boris Johnson has pledged in the Daily Telegraph, which reportedly pays him £275,000 a year for his musings, to increase the threshold for the 40p tax rate to £80,000, a move he claims will “stimulate” the economy as we leave the EU.
There is no doubt that Boris’s tax bribe for the better off would be immensely damaging to our economy at a time when we need to be bracing ourselves for the headwinds that would confront us in the event of a no-deal Brexit.
As the Daily Telegraph’s own figures make clear, Boris’s expensive election gimmick would cost the public purse £10billion every single year. He plans to replace this money by raiding the pot of money put aside by the Treasury for no-deal preparations. That’s despite his continued insistence that a Johnson-led government would be prepared to see us crash out without a deal. It is reckless to leave the EU without a deal, even more so to scrap the money to plan for it if you are hellbent on taking this kamikaze approach.
It’s therefore hardly surprising that according to Institute for Fiscal Studies analysis, it is the highest earners and wealthy pensioners who will receive a “substantial tax cut” from this plan. Anyone earning over £80,000 a year will pay £6,000 less income tax each year, although some money might be clawed back through Boris’s plans to raise national insurance.
As the Resolution Foundation point out, if you are a rich pensioner though you’re not paying NI anyway, and so pensioners with incomes of over £80,000 will get the full £6,000 tax cut. £6,000 is what someone on the minimum wage working full time would take 4 months to earn and yet they receive nothing from these proposed tax cuts.
At the same time, ordinary workers continue to struggle with low wages, insecure work and zero-hours contracts, as well as cuts to tax credits and universal credit. Figures show that 90% of working age people won’t get a penny from this change.
But this leadership election isn’t about them. Boris Johnson isn’t appealing to the wider country, to ordinary workers or to those who struggle to get by. He doesn’t have to. Instead he is trying to buy his way into Number 10 with a hand-out to the rich. Paid for by us.
During the referendum Boris Johnson promised £350million a week for the NHS. Today he is showing his true colours with billions in tax cuts for the rich and nothing for those struggling to make ends meet or for the NHS which has been starved of funds by nine years of Tory austerity. But that’s Boris’s pitch to the country; a more divided society with tax cuts for the few and insecurity and underfunded public services for the many.
Rachel Reeves is the Labour MP for Leeds West and economic policy co-ordinator for the Future Britain Group