Hiking events

Labor should not draw the wrong lessons from their polling heads. Tax hike remains unpopular

The results are there, and unusually, Labor has labeled it correctly: the 45% income tax rate for high earners is popular with voters.

Perhaps we should qualify here: the decision to abolish the 45% rate was unpopular, which is not quite the same thing. There is, after all, no tax that can be called ‘popular’, especially with those who have to pay it.

Perhaps due to the impressive rebound in the polls that Labor has experienced during their week in conference, the leaders have started to seem more confident about their program of government, believing, perhaps for the first time since the mandate of Keir Starmer, that it will actually be implemented.

Such confidence can be attractive to voters, provided it does not become excessive. So the question is, would Starmer be so optimistic about taxing “different forms of income” if polls hadn’t shown that he is preferred (by some margin) as prime minister to Liz Truss?

It would be a shame – although quite predictable – if Labor’s joy at finding themselves, with little effort on their part, with a substantial lead in the opinion polls, led to electoral disaffection. The temptation to believe that the time has come to affirm a more radical outlook must be great and understandable. But you have to resist it.

On the surface, this certainly seems like an opportune time to declare its intention to “dip the rich.” It would put a spring in the step of the militants who would have spent the last few days hiding their disappointment with the relatively modest proposals currently in the party platform. If the public is against lowering the top tax rate, as Kwasi Kwartang has proposed, surely that means the public has an appetite for more wealth taxes?

Starmer himself doesn’t seem to think so. Or at least he objects to calling them that. “We are looking at how to fairly tax wealth on each other. I look at whether and how we tax all the different forms of income.

Told on LBC Radio that it looked like a wealth tax, the Labor leader replied: “No, it’s not really a wealth tax. It looks at different forms of income, these are stocks, shares and dividends.

It’s all too easy to draw comparisons to Ed Miliband’s not-so-lamented mansion tax, which is seen as one of the (many) reasons why voters were unwilling to vote for his party in 2015. And this experience should serve as a warning. Labor not to embrace its fiscal instincts too enthusiastically. Granted, 2015 was a million years ago, politically speaking. Perhaps today’s voters, so enraged by Kwarteng’s gift to the unworthy wealthy, would feel more tempted to support Miliband’s flagship redistributive policy. But it would be unwise to bet the house (so to speak) on such a prospect.

Starmer must be careful. There is little harm in seeking new sources of revenue, especially since any government that takes office after the next election will face extraordinarily difficult economic circumstances and associated spending restrictions. The problem with vagueness when it comes to raising taxes is that people have every right to fear that their wallets may be a target, even if it turns out not to be. If the energies of an opposition party are invested in finding imaginative new ways to extract money from an unsuspecting public, it may suggest that any government formed by that party will not stop its efforts to find new sources of income after coming to power. .

The electorate currently considers that circumstances preclude, or should preclude, tax cuts, especially for the wealthy. But it’s a view that has no doubt been exacerbated by events since last Friday’s mini budget, and not just by the fiscal event itself. Which means voters could still change their minds about the wisdom of tax cuts – and especially tax hikes – in the short to medium term.

Again, it is necessary to revisit Labour’s own electoral record to find the way forward. Tony Blair won people’s trust, not just because he promised not to raise lower or higher tax rates, but because he and Gordon Brown convinced the electorate that their instincts were against taxes higher. It was a stunning achievement, given Labor’s record of delivering tax hike promises in previous elections (in which they had been defeated).

Starmer should enjoy his success and relish the prospect of a position. If he does, it will be one of the biggest and most dramatic turnarounds in the history of any political party. But that’s not enough to justify wasting the party’s hard-earned (and easily lost) reputation as an unwilling taxpayer.