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Sign of split in party ranks

Labour’s Umunna ‘wavering’ on top rate 50p tax

Chuka UmunnaChuka Umunna, the shadow business secretary, has hinted that a future Labour government would not make a 50p top rate of tax permanent.

In what has been seen as a departure from party leader Ed Miliband’s position, Mr Umunna said in an interview that he did not believe in taxing the sake of taxing.

A 50p rate would only be necessary to help meet the cost of public services and cut the deficit.

The 50p rate was introduced by Gordon Brown’s government and was cut by the coalition to 45p under pressure from business leaders who said it was a tax on enterprise.

Chancellor George Osborne argued that it raised less than forecast and that combined with the cost of implementation it barely registered as a revenue earner for the Treasury.

Mr Miliband – together with the SNP – is keen to re-introduce the 50p rate but now appears to be at odds with one of his frontbench spokesmen.

Speaking in an interview with the New Statesman, Mr Umunna said he didn’t want to see the 50p rate as a permanent fixture.

He told the left-leaning magazine: “I wouldn’t want to do it permanently because, as I said, I would like to see the tax burden as low as possible. I don’t believe that you tax for the sake of taxing, you tax to fund public services and, currently, to reduce our deficit and our debt.”

Mr Miliband said in 2010 that he would make it permanent because it was not about reducing the deficit but about having a fairer tax system.

Some commentators are speculating that Mr Osborne may yet spring a further tax cut promise on the electorate before the poll on 7 May including a reduction in the top rate to 40p where it was during Tony Blair’s term.

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