UK Politics

Labour leader Ed Miliband: Top earner tax breaks 'must end'

Labour have urged the government to "reverse" cuts to child tax credits and working tax credits by cutting tax breaks on the pensions of Britain's highest earners.

Shadow chancellor Ed Balls said tax relief on pensions of those earning more than £150,000 a year should be reduced from 50% to 26% in the Budget.

He argued that the money raised could end "tax rises on ordinary families".

But the Conservatives said Labour could "never be trusted" to run the economy.

Chancellor George Osborne will announce his plans in the Budget on 21 March.

There has been speculation the 50p top rate of income tax for earnings over £150,000 may be axed, with the Lib Dems calling for some type of wealth tax to replace it.

At a pre-Budget event in London, Labour urged the coalition to "change course" over its plans to reduce the deficit.

'Not working'

The government says getting the UK's finances back on track is a crucial part of helping the economy to recover.

But Labour leader Ed Miliband said Chancellor George Osborne had no "compelling vision" for creating growth

He added that current policy was "not working for the people of this country" and that there had to be more emphasis on training and industry.

Mr Balls said the coalition had effectively cut annual tax paid by people earning more than £150,000 a year by £1.6bn.

He added that this should be "reversed" and that this would allow the government to cut fuel duty or undo changes to child tax credits or working tax credits.

Mr Balls said: "People are increasingly worried about what's happening to employment, the economy and the deficit, as well as their own living standards.

"We have got to get across an alternative which is long-term and fair."

He also said: "The priority must be to ease the squeeze on families on lower and middle incomes."

But Conservative Party deputy chairman Michael Fallon said: "At his sixth relaunch earlier this year, Ed Miliband promised Labour would no longer call for unfunded Budget giveaways.

"But in just two months since then, he and Ed Balls have broken this promise by irresponsibly calling for £31bn of unfunded spending increases and tax cuts. That means more borrowing and more debt every year.

"This shows why Miliband and Balls - Gordon Brown's former right-hand men - can never be trusted with our nation's finances again."

John Cridland, director-general of the CBI employers' group, said: "Any further reduction in pensions tax relief, just a year after the government's cut to the annual allowance hit many higher earners, would be a breach of trust with those already paying higher taxes, and harm our ability to attract the best talent to the UK.

"The coalition has already rejected similar plans advanced by the previous government to limit relief to the basic rate of income tax, believing them to be unworkable."

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