The mansion tax threshold was raised from £1.5 million to £2 million because of the twenty constituencies with the greatest number of houses valued at over £1.5 million (which include Putney), fourteen were won by Labour at the last election. And of course Keir Starmer, David Lammy and Pat McFadden, whose homes are are all worth around £1.7 million, will escape the tax.
But the real problem, in my opinion, is not just that Rachel Reeves is out of her depth, though she clearly is, but the contradiction in Labour's current philosophy. Labour is trying to reconcile a market economy with a welfare state in which literally millions of people are on benefits. The current leadership under pressure from backbenchers pretend that welfare spending can be funded by taxing the rich. But the fact is that there are not enough rich people to go around, so they are forced to clobber the middle classes. Soon a quarter of the diminishing proportion of wage earners will be subject to tax at 40%. This will inevitably slow growth and diminish tax revenues, at which point more people will need to be dragged into the higher tax brackets. It makes no sense. I wonder how many contributors to Putney Forum, who before the election welcomed the prospect of a Labour victory, are now experiencing voters' remorse. |