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"You'll only pay £50 a year more in tax under a Labour government" - this is a very misleading statement, and to get the bigger picture and a better understanding of why people prefer the Conservative Economic policy, you're going to have to compare three tax models:
1) Current tax model
2) Proposed Labour tax model
3) Proposed Conservative tax model
2) Proposed Labour tax model
3) Proposed Conservative tax model
The current tax bands are as follows:
- £12,500 personal allowance
- 20pc threshold is set at £50,000
- 40pc threshold is set to £50,001 - £150,000
- £12,500 personal allowance
- 20pc threshold is set at £50,000
- 40pc threshold is set to £50,001 - £150,000
A £100,000 earner under this model would pay:
1) 0% on the £12,500 - £0
2) 20% on the next £37,500 - £7,500
3) 40% on the next £50,000 - £20,000
A total of £27,500 in income tax (and then there's NI too)
1) 0% on the £12,500 - £0
2) 20% on the next £37,500 - £7,500
3) 40% on the next £50,000 - £20,000
A total of £27,500 in income tax (and then there's NI too)
Under Labour's proposed model,
The Additional Rate (45%) would be lowered from earnings over £150,001, to earnings over £80,001.
The Additional Rate (45%) would be lowered from earnings over £150,001, to earnings over £80,001.
Under this model, a £100k earner would pay:
1) 0% on the £12,500 - £0
2) 20% on the next £37,500 - £7,500
3) 40% on the next £30,000 - £12,000
4) 45% on the final £20,000 - £9,000
A total of £28,500 in income tax
1) 0% on the £12,500 - £0
2) 20% on the next £37,500 - £7,500
3) 40% on the next £30,000 - £12,000
4) 45% on the final £20,000 - £9,000
A total of £28,500 in income tax
£1,000 more a year - which when viewed in isolation, is not bad at all - especially for all the other things 'promised' in the Labour manifesto.
However, when you compare this against the Conservative's proposed model, it's a different story to say the least.
However, when you compare this against the Conservative's proposed model, it's a different story to say the least.
The Conservatives have proposed raising the Higher Rate (40pc) threshold to £80,001, extending the Basic Rate (20pc) to cover earnings between £12,500 to £80,000.
Under this model, a £100,000 earner would pay:
1) 0% on the £12,500 - £0
2) 20% on the next £67,500 - £13,500
3) 40% on the next £20,000 - £8,000
A total of £21,500 in income tax. £7,000 less than Labour's proposed model.
1) 0% on the £12,500 - £0
2) 20% on the next £67,500 - £13,500
3) 40% on the next £20,000 - £8,000
A total of £21,500 in income tax. £7,000 less than Labour's proposed model.
£7,000 - or 7% of gross annual income - is not an insignificant amount. To say people are reluctant to pay c.£50 more a year in income tax is very myopic. The differences are potentially substantial.
Please note that this is an objective analysis of tax proposals, which do not factor in NI or any other deductibles. I am not endorsing a particular model here, although i'm sure most of you know my economic stance already.
Also, these 'promises' could turn out to be nothing but election fodder; and in reality, none of the above manifests, no matter which Party wins the upcoming General Election.
Like that would come as any surprise at all...
