In a recent interview on BBC One, shadow chancellor John McDonnell said that Labour will not increase taxes for 95% of earners if they win the 8 June election.
As part of an election “personal tax guarantee”, people earning less than £80,000 a year will be spared from the tax rise. It will, however, affect those earning more than £80,000. Otherwise, the government will not have a way to fund public services.
During the interview, Mr McDonnell said that the party is ruling out a tax increase for low and middle earners, protecting them from overall tax burden until 2022. They won’t have to worry about the increase in the standard VAT rate of 20% and personal NI contributions either.
The top 5% earners, however, will have to pay more taxes.
Mr McDonnell assures the majority of tax payers that they will not be affected by the tax rise. The details of this Labour ruling will be outlined in their manifesto.
When asked about reinstating the 50% income tax rate for those earning more than £150,000 a year, he said that Labour is yet to determine the level in the weeks to come.
What is certain, however, is that employers’ National Insurance contributions will remain the same. Except for private school fees, there will be no changes on products “zero rated” for VAT either.
So far, the spending commitments of the Labour party includes giving NHS workers more than 1% pay rise, restoring student grants, and hiring 10,000 new police officers, the majority of which are said to be covered by capital gains and inheritance taxes and corporation reversal of cuts.
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