This article was written by David Josephs, chair of Hitchin and Harpenden Labour Party.

Labour’s manifesto is undeniably ambitious, and predictably, its launch saw many commentators shriek hysterically at the cost of that ambition. But what are the facts behind the headlines? Here we consider some of the most common criticisms and provide the answers.

The evidence shows if you tax people more, only a tiny percentage will move – and they may have been planning to anyway

There is absolutely no evidence from anywhere that tax increases lead to population drift. Research from around the world suggests that the group most likely to move as a result of tax changes are the less well off. Sure, some people will move, but in they were likely too anyway. Most stay.

Labour supports and values business, recognises the need to create wealth, and its corporation tax increases are not draconian

The claim that Labour is anti-business is an easy headline, but based on no facts at all. Yes Labour proposes an increase in corporation tax to help pay for new commitments, but this only returns corporation tax levels to those last seen earlier this decade. And remember they are a tax on profits, not turnover. Labour is proposing a new way of taxing global firms so that they pay the tax according to the profits they return in each territory. Unitary taxation, as this is known, is widely lauded by tax experts as being an international necessity. Big companies like Amazon and Google, make enormous profits in the UK, and it’s only fair that they pay tax on those profits like everyone else. This is not anti-business. It is pro-fairness. 

Income tax rates will only rise for those earning more than £80,000 per annum

Labour has been totally transparent about its need to raise taxes for some people. Interestingly, compared with many Scandinavian countries, where public services are widely regarded as being world leading, and which many of us yearn for, our tax rates are pretty standard. The average salary here in Hertfordshire is around £34,000 per year. Under Labour’s plans only people earning more than £80,000 per year will pay more income tax. if you earn £100,000 per year, for example, you will pay an extra £19.23 per week. No one is suggesting that money is not hard earned, but we do need to invest in our public services, which is why Labour is proposing that those earning more pay a little more.

Labour has made a commitment to fiscal responsibility

First and foremost, no one is suggesting that everything that Labour is proposing will be implemented within weeks of the election. It will take time. Priorities will have to change depending on the ultimate outcome of Brexit, and indeed the global economic situation. 

On Page 7 of the Labour  Funding Real Change booklet it commits to the following fiscal credibility rule:

To eliminate the current budget deficit by the end of the rolling five year forecast period of the Office for Budget Responsibility

Labour is clear that it has to be financially responsible.

Labour’s costings document is far more detailed than those of any other Party

The detailed 44 page finance document which forms part of the Labour manifesto has made its assumptions using behavioural analysis to estimate taxpayer response to tax changes. Thus the Party’s economics experts have included estimates of taxable income elasticity (TIE) at each band to make its workings as robust as possible. 

There is no doubt that Labour’s financial plans are the most transparent of all the political parties. 

And finally

When the global financial crisis threatened to destabilise the world’s entire banking system in 2007-2008, it is widely recognised that Labour saved the day with its swift and impactful response in which it supported our banks in order to prevent systemic failure.

11 years on, our country’s public services are on the verge of similar systemic failure. The banks were indeed to big too fail. Likewise, the NHS is too important to us to be lost. Our schools are our future. If we don’t invest in sustainable transport and jobs we might not even have a future.

The Labour manifesto is unashamedly ambitious, but that is precisely what our country needs, right now. The real question is not can we afford to do it, but can we afford not to?

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