In 1992 the headlines about tax were very similar to today. The Labour party under Neil Kinnock as leader of the opposition and John Smith as Chancellor of the Exchequer were promising a very large increase in taxation, from a top rate of 40% they were promising (threatening) a top combined rate of tax and NI of 60%.
Businesses and individuals took some action to plan for this possibility. Some individuals considered moving abroad and others in private companies paid themselves large dividends before the election. In the event, their plans were not necessary as the Conservatives won a victory which was at least partly considered at the time to be due to Labour’s heavy taxes. Although these were designed in 1992 to hit the few and not the many, the general suspicion was that eventually they would have hit the majority of the electorate which may have been one of the reasons why Labour lost.
Is history repeating itself? The tax rises proposed by Jeremy Corbyn and John McDonnell are actually less than those proposed 25 years ago. However, the same fear may exist that the planned tax rises will not be enough to fund planned Government spending and that the many not the few will eventually pay. That tax bombshell fear could lead to a similar result at the next General Election.
