ED BALLS' pledge that Labour would bring back the 50p top rate of income tax for those earning more than £150,000 has drawn howls of indignation from business. The Tories have also attacked the plan saying it would put "the economic recovery at risk".
Writing in the Daily Telegraph Boris Johnson attacks Balls' proposal on two fronts. The London mayor says George Osborne's decision to cut the top rate of tax to 45p has actually produced more tax revenue than the 50p rate. Writes Johnson: "Indeed, the top one per cent of income-tax payers are now producing a record 30 per cent of all income tax, and the top 0.1 per cent are producing 14.1 per cent of all income tax."
If Balls had any "logic or honour", writes Johnson, he would have admitted defeat and abandoned any attempt to bring back the 50p tax rate. Instead he has revealed that "given the choice, he would rather have a higher rate of tax than higher tax revenues".
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Johnson says Balls' initiative is either "stupid" - the result of a lack of business experience - or cynical, because the 50p rate is popular with the electorate.
The Sun labels Balls' proposal a "tax con". While a higher tax rate for the rich sounds fair, it's really "just more of the same old Labour policies that got us in this mess," the paper says. "Almost every business leader in the country agrees that sticking the rate back up will damage our competitiveness. And in the ruthless global race for investment - in other words, jobs - any self-imposed handicap is madness."
The Financial Times' economics editor Chris Giles says it's impossible to know if more tax revenues would have been collected if the 50p rate had not been abolished by the coalition. He says Balls' initiative "polls well" because so few people pay the 50p rate and they already have the highest incomes. As a result, the coalition will find the move "hard to counter".
The BBC's political correspondent Ross Hawkins says Balls' move will "enthuse some Labour supporters", particularly those who are disappointed he hasn't committed to reverse more cuts. But the party "can't know whether voters at large will see this as a fair change, or - like the Institute of Directors - a 'political gesture'."
The Times gives an unequivocal thumbs-down to the scheme. The 50p rate is stupid, its editorial says, from the point of view that actually matters - "that of the economy and everyone it employs". Pushing the top tax rate back up to 50p may or may not win Labour votes at the 2015 election, but it "will raise little if any extra money for the Exchequer". More seriously, it will "punish those entrepreneurs who cannot go elsewhere and send an unmistakeably hostile signal to those who can".
The Guardian is considerably more supportive of the shadow chancellor's proposal. It says the commitment to a new tax rate is "warmly welcome". Firstly, it opens the possibility of a "more rational discussion about how we sustain public services that are currently set to be savaged by the coalition's lopsided retrenchment", the paper's editorial says. Second, it gives "some meaning to otherwise-empty words about fair sharing of the pain".
