Here’s what to expect
52p top rate of tax
Ed Balls won’t be looking for money when he says the ‘additional’ top rate of tax will go back up — there’s no evidence it will raise any. Top-band income tax will be 50p, which added to the extra 2p National Insurance would give Britain an effective top tax rate of 52 per cent. If it’s a temporary measure, as Balls has hinted, one-percenters will defer bonuses and disappear from the statistics (a problem, when they pay £1 in every £4 of income tax). If it’s permanent, they may scarper. If Balls really wanted to raise money from the rich he’d cut the 45p rate. But what he’s really after is banking public support by banker-bashing.
In his first Budget, Ed Balls would raise corporation tax by 1 per cent to 21 per cent, the first increase since 1973. And that might just be the start. Any rise could mean less employment and lower pay: the CPS estimates that putting the rate up could cost 96,400 jobs in the next Parliament. The coalition has been cutting corporation tax and employment has risen by 1.9 million.
If you enjoy council tax and stamp duty, you’ll love this. Labour’s mansion tax will be like a council super-tax on homes worth more than £2 million. Ed Balls says that houses worth over £2 million will pay £3,000 a year, amd won’t be drawn on higher bands. But he wants £1.2 billion a year out of around 100,000 homes — meaning an average charge of £12,000. One of those paying will be Ed Miliband, unless he sells his house; it will be little comfort to Cameron and Clegg that they just miss out.
Fewer new schools, less choice
No new schools could open in areas with ‘spare capacity’ (i.e., places to fill in bad schools). This means less parental choice, especially in poorer areas where demand for new schools is highest.
NHS reform put into deep freeze
Tony Blair wanted to let NHS patients opt for private hospitals: why should only the rich get Bupa? Miliband has signalled that this is heresy: expect it to be reversed.
A government-created high street bank
If you thought bankers were terrible, wait until you see the government have a go at their jobs.
10p tax rate
It took Gordon Brown eight years to correct his mistake in introducing a 10p starting rate of tax. Labour wants to make it again, using money from scrapping the married couples’ tax allowance. It needlessly complicates the system. Why not just raise the personal allowance?
Energy price ‘freeze’
Expect fuel companies to put up their prices, to ensure this comes at a higher level.
Bank bonus tax
Ed Balls would sting banks with a one-off 50 per cent levy on discretionary bonuses to employees — who will then be taxed on the bonuses too. The tax will include ‘allowances’ — the loophole banks use to sidestep EU limits on bonuses. Banks and bankers will have to find another way to keep their money — perhaps by leaving the UK.
Non-dom status abolished
Ed Balls himself was opposed to this one as recently as January. ‘If you abolish the whole status, then probably it ends up costing Britain money,’ he said. Then, he rightly feared a flight of talent. Now, he doesn’t seem to care.