Labour dismisses PM's tax rate talk

The Conservatives and Labour have been arguing over tax policy

The Conservatives and Labour have been forced to fend off rival claims about their future tax plans.

First published in National News © by

Labour has dismissed suggestions by David Cameron that he wants to increase the 40p tax threshold as "vague talk of jam tomorrow".

The Prime Minister insisted he would "love" to increase the trigger point at which earners start paying the higher rate and said he understood that many of those caught by it did not see themselves as fundamentally wealthy.

But Chris Leslie said two million more workers will have been dragged into the 40p rate under the Coalition.

The shadow chief secretary to the Treasury said: "David Cameron should be judged on his actions, not vague talk of jam tomorrow. Under this Government people on middle and low incomes are paying more because of changes like the VAT rise, while millionaires have been given a tax cut.

"In fact, Institute for Fiscal Studies figures show a family with children will be on average £974 a year worse off by next year because of tax and benefit changes since 2010. And 2 million more people will be paying tax at the 40p rate than when David Cameron came to power.

"Labour wants to cut taxes for 24 million people on middle and low incomes with a lower 10p starting rate of tax."

Conservative backbenchers, backed by former chancellors Lord Lawson and Lord Lamont, have been pushing for a major rise in the level at which the 40p rate kicks in, complaining that the failure to increase the threshold in recent years has seen thousands of workers forced into the higher rate in a process known as ''fiscal drag''.

The current trigger point is £41,865 and it is due to go up by a further 1% in April 2015 to £42,285.

When the 40p rate was introduced by Lord Lawson in 1988, it caught around 1.7 million taxpayers, but that has risen to around 4.4 million.

During a visit to the north west, Mr Cameron said: "I know that a lot of people believe that the 40p rate now kicks in quite early and quite a lot of people who don't see themselves as fundamentally very wealthy are paying that 40p tax rate.

"Now I would love to be able to stand here and say we are going to sort all this out, we will raise the thresholds for all these tax rates. I can't make that promise today."

He added: "I would love to make more promises. I understand the problem with the 40p rate kicking in while people aren't earning a lot of money but I have to look very carefully at the books before I can make any promises about it."

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