For 15 years, 1995-2010, there was a political truce after Labour’s defeat in the 1992 election which was generally attributed to their promise of higher taxes. Tony Blair promised not to raise the basic or higher rate of tax and the issue lost most of it’s electoral potency.
Since the Labour government raised the top rate to 50p in the last days of its administration of 2010 tax has not been barred from the headlines and it is the politics of this that have come to dominate taxation policy.
In 1992 when Labour pledged to increase taxes on the highest paid many people feared that they would increase taxes for everyone. There is a similar danger this time around. The Conservatives have not ruled our reducing the top rate back to 40% and given the strong pressure on the back benches it is very likely that a Conservative majority government would seek to do this whilst probably reducing tax reliefs available to higher rate taxpayers. The Lib Dems are committed to 45p and would probably only agree to a change in exchange for other taxes being raised on wealth or property.
Given the narrowing of the 2 main parties in the opinion polls it is difficult to predict the future. However the Tories might be pleased with the focus on tax for 3 reasons:-
1. It helps consolidate support amongst their own natural supporters.
2. Combined with Labour’s pledge to raise corporation tax it makes Labour look hostile to business and cuts their sources of funding.
3. It may indirectly damage UKIP. One of UKIPs strong messages is that all the other parties are basically the same. The Labour pledges to raise taxes undermine this and may persuade many of those who will support UKIP in the European elections to return to the Conservative party for the general election.
