After a week dominated by welfare cuts, an area where public opinion favours the coalition, Labour is hoping to regain the political advantage tomorrow when the 50p tax rate is officially reduced to 45p. Polls have consistently shown that the public, including Conservative voters, are overwhelmingly opposed to the move and an increasing number of Tory MPs (such as Jesse Norman and Robert Halfon) recognise that the decision inflicted permanent damage on their party’s brand.
Labour has dubbed tomorrow “Tory Millionaires’ Day” after calculating that the UK’s 13,000 income millionaires will receive an average tax cut of £100,000 a year (nearly four times the median salary of £26,500). Now the party’s number crunchers have produced some equally potent stats on the gains that the top earning bankers will make. Labour has calculated that 643 bankers, working in the UK’s five major banks and earning more than £1m a year, will receive a combined tax cut worth at least £34.6m per year – an average of £53,775 per banker. Millionaire bankers in the state-backed RBS and Lloyds are set to get a tax cut of over £7.5m per year – an average of £63,686 each. In addition, the 40 highest paid senior bank executives will receive a tax cut worth almost £4m – an average of £99,694 each.
Chris Leslie, the shadow financial secretary to the Treasury said:
People on middle and low incomes, who are paying more in higher VAT and seeing their tax credits and child benefit cut, will be totally appalled at the size of this government’s tax giveaway to highly paid banking executives.
While the average family will be £891 worse off this year because of tax and benefit changes since 2010, it cannot be right for David Cameron and George Osborne to give a huge tax cut to millionaires this weekend.
Forcing millions to pay more while millionaires pay less is the act of a government that is totally out of touch and consistently stands up for the wrong people. Bankers are getting a bonus from David Cameron and George Osborne, while Britain’s families pay the price for their economic failure.
For Osborne, who was careful in the Budget to emphasise that the banks would not benefit from the reductions in corporation tax, the figures are a political headache. The Chancellor’s consistent line is that the 50p rate was ineffective because the rich avoided it (in fact, as I explained here, it raised £1bn in its first year and would have gone on to raise more) but to most voters that sounds like an argument for clamping down on avoidance (as the coalition claims it is doing), not for cutting taxes for the highest earners.
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