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Courtesy of the Times
John McDonnell is facing a revolt over tax cuts after Labour figures demanded to know why he was endorsing a Tory tax cut which will benefit higher earners. Writing for The Times Red Box, the Labour mayor of Greater Manchester, Andy Burnham, takes the unusual step of calling the position unsustainable, shifting attention from government and onto internal tensions in the opposition.
He writes: “I can’t see how tax cuts for the wealthiest can be the top priority when our police are so stretched and there are people dying on British streets for want of a roof over their head.”
It comes after Labour’s shadow chancellor was challenged on whether he would keep the changes to the personal allowance, the amount workers can keep before they pay income tax, announced in the budget yesterday. The chancellor Philip Hammond brought forward increases in the allowance, in what he branded a tax cut for 32 million people. The promise to increase income tax thresholds to £12,500 in the case of the personal allowance and £50,000 in the case of the higher-rate threshold by 2020-21 a year early, will cost of £2.8 billion in 2019-20, falling to £1.8 billion in 2023-24, due to a cash freeze in 2020-21. Mr McDonnell told BBC Radio 4’s Today programme: “We will support the tax cuts at the moment on the basis that it will inject some demand into the economy. “But we put forward in the general election a fairer taxation system so that does mean that we will be asking the top 5 per cent to pay a bit more in income tax and we will be rolling back many of the corporation tax cuts that have taken place, and we will be cracking down on tax evasion and tax avoidance. “What we’ve said is we will leave those personal allowances at whatever we inherit but our focus will be on a fair taxation system.”
In his Red Box article, Mr Burnham denounced the move, saying that the choice for all MPs is whether they “support a £400 windfall for the top 10 per cent when thousands are sleeping on the streets?”
He added: “I am hoping that I misheard John (McDonnell’s) position or that he made a quick decision before he had time to go through all of the Budget analysis. Either way, I would advise him to avoid the mistake we made in 2015. Don’t let this run for days and then come up with a compromise to save face that pleases no-one. Hammond’s package couldn’t even be justified in the good times and certainly not now. Labour should oppose it — starting today.”
