Monday , June 17 2024

Are the Conservatives the Party of the Rich?

Writing for the Daily Globe UK several weeks ago, I sought to defend the current government in terms of policies which have impacted on the lowest paid in Britain. I defended the Conservative record and argued against the media narrative that the lowest paid have been hammered by a pernicious government. At the same time the Conservatives have been portrayed for many years as the party of entrenched privilege, not of the ordinary man or woman on the street. In this piece, I aim to demonstrate (several disastrous Budgets aside) that the Conservatives have been much more ‘progressive’ when taxing higher earners than the media narrative suggests.

The Conservatives have introduced a series of policies which have raised more money disproportionally from higher earners. Back in the Emergency Budget of 2010, George Osborne hiked the rate of capital gains tax from 18% to 28% for additional rate tax payers. Even though this was reduced to 20% in 2016, it is still a higher rate than when Labour was in power. Another way Osborne collected more money from the wealthy was by increasing dividend tax. Under Labour, higher rate taxpayers paid 25% and additional rate taxpayers paid just over 30%. After the 2015 Budget, these rates were hiked to 32.5% and 38.1% respectively. KPMG remarked at the time that higher rate taxpayers would be up to 25% worse off under changes.

Alongside higher taxes on individuals, even the previously universal Child Benefit was changed so middle and high earners could not receive it. This controversial change back in 2010 removed the benefit from those who were earning £44,000 a year. This £1 billion annual saving directly challenged many Conservative members and voters to show they were ‘in this together’ when tackling the budget deficit.

Although the government has sought to raise taxes on the wealthy where practical, this has generally not been at the expense of damaging business and investment. Decisions have been made to cut some taxes on higher earners as this can raise more money for the treasury. The cut in the higher rate of income tax from 50p to 45p was undoubtedly the correct decision. This has led to an increase in higher income individuals settling in Britain as the top 1% are now paying over 27% of all income tax (up from 24% in 2010). This is the highest proportion on record. We must not let the Left forget President Hollande’s disastrous decision to raise the top rate of tax to 75%, this led to less money being raised after meagre returns.

It is the same story for corporation tax. Revenues have increased by 50% since this tax was cut from 28% in 2010 to the current rate of 19%. Having the most competitive tax rate in the G7 has led to more businesses wishing to invest in Britain. This means more jobs being created, resulting in more people paying tax which funds our public services. These figures show that Jeremy Corbyn’s policy of abolishing tuition fees by raising corporation tax is beyond ridiculous. Never mind fake news, this is a clear example of fake maths.

I hope I have demonstrated, the lazy portrayal of the Conservatives ‘balancing the books on the back of the poor’ does not stand up to scrutiny. Ultimately, the budget deficit has been closed by all sections of feeling the pain. The government’s increases in stamp duty, dividend tax and capital gains has challenged many traditional Conservatives, many of whom have claimed these changes would stifle investment and entrepreneurship. This fear of upsetting the base is surely the reason why government ministers fail to mention the fact that the wealthier are paying more. Nonetheless, if we are to combat the Left’s beloved narrative that the Conservatives only support high earners at the expense of the poor, we will need to respond with a reminder that those in a more privileged position are paying more taxes than ever before.

About Paul Maginnis

Paul Maginnis is a Conservative Party member, and author of The Return of Meritocracy: Conservative Ideas for Unlocking Social Mobility.

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