The Labour Party on Thursday unveiled plans to increase taxation on big business and high earners to fuel their £80billion-a-year public spending fee. John McDonnell defended the proposal after a slew of economists branded the election masterplan as “simply not credible.” As the Shadow Chancellor explained the benefits of the plan BBC Today host Nick Robinson demanded the frontbencher “be straight” with British voters and admit they would all have to pay higher taxes to support public spending under Labour: “More control for workers, more control for consumers, more control from politicians telling businesses what to do.
“The point underlying this is that corporation tax is paid by the self-employed, is paid by small business owners, is paid by anybody who has a pension that invests in shares.
“Be straight with the people, Mr McDonnell – ordinary people will have to pay if you suddenly want to turn this country into having the biggest state it’s had since the 1970s.”
Mr Robinson added: “It’s insulting to their intelligence to pretend anything else.”
But the Labour Chancellor insisted 95 percent of the British population would see little to no increase in taxation under a Jeremy Corbyn-led government, saying the party would help “democratise” the economy.
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Mr McDonnell said: “Certainly not, what we’re saying is that, with the structural changes we will make in the economy, we’ll make sure the corporations themselves do not take that easy option of cutting wages or rising prices.
“Actually, because we are democratising the way in which these corporations work and are more accountable, they will actually invest in their companies instead of being driven by short-term profiteering and shareholders’ interests only.
“They will think for the long term, invest and grow the economy – and that’s what’s happening elsewhere.”
Following the publication of the manifesto, the Institute for Fiscal Studies (IFS) warned Mr Corbyn’s spending plans would turn into the biggest tax burden created since World War II.
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IFS economists urged the Labour leader to stop “pretending that everything can be paid for by companies and the rich” and admit the tax increase would “affect many in the population.”
The 105-page manifesto also proposed lavish spending on schools, hospitals and welfare benefits as well as renewing Labour promise to scrapping university fees for students and triggering a second EU referendum that could block Brexit.
But the IFS said Labour’s pledges are unrealistic and there are substantial “risks” with both the proposed spending increases and the proposed tax rises.
In a report, the IFS: “It will be extremely hard simply to deliver anything like this scale of increase in capital spending, at least in the near-term, certainly in an efficient and cost-effective way.”
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The IFS added that Jeremy Corbyn’s pledge to keep the state pension age at 66 – instead of allowing it to rise as longevity increases – was a “particularly expensive commitment” that would add about £24billion a year.
Abolishing university tuition fees was an “expensive giveaway” that could cost the taxpayer £7billion per year and would be “difficult to maintain” without a cap on student numbers.
The IFS were particularly critical of Mr Corbyn’s tax plans, which they warned would place “much of the burden” on “all of us”.
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