Peter Riddell and Philip Webster
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Alistair Darling’s decision to introduce a 50 per cent tax rate for high earners next April is backed by a majority of voters, according to the first post-Budget opinion poll.
The Populus survey on Wednesday evening shows broad support for the main Budget measures, though there are doubts about whether they will make any difference to the country or to voters’ families.
Nearly three fifths, 57 per cent, have a positive view of a 50 per cent tax rate on earnings topping £150,000 a year, with 22 per cent against. Support is highest among retired people, unskilled workers and those living in Scotland and Wales.
The findings, though welcomed by ministers, came alongside a sustained push led by Gordon Brown to counter suggestions that the higher levy represented the death of new Labour, which has always stood out against raising income tax rates.
Mr Darling even suggested that it might be temporary and The Times has learnt from authoritative sources that the Prime Minister and Chancellor considered imposing the tax for a limited period. However, it was decided that although it was easy to make November’s 2.5 per cent cut temporary, to do so with the new tax would be seen as unrealistic given the state of public finances.
The Times also understands that Mr Darling and Mr Brown consulted Lord Mandelson, the Business Secretary and one of the architects of new Labour, last week to get his backing before going ahead with the move.
He accepted it as a practical necessity born of exceptional economic circumstances and said yesterday: “It’s most certainly not the end of new Labour. We are not a high-tax party. We don’t tax for its own sake.”
The rest of the Cabinet did not learn of the plan until the pre-Budget meeting on Wednesday morning. By then it would have been too late to object, though it is understood that no opposition was raised.
Mr Darling said the top rate would apply “while we resolve this situation”, raising the prospect that it could eventually be removed. Mr Brown said it was not politically driven. “This is not taxation for its own sake — it is tax for a purpose.”
Earlier, at a Prince’s Trust event in North London, Mr Brown said that it had been necessary to raise taxes to get the public sector back on track and that it was right that the better-off should contribute more.
George Osborne, the Shadow Chancellor, said of the 50 per cent tax: “I don’t like it. I don’t think in the long run higher tax rates are a great idea for an economy. However, I cannot promise to reverse it.”
The poll found the public evenly split — 49 to 46 per cent — on whether the big increases in tax on high earners were “a fair way of managing the burden of repaying debt”. More than half — 53 per cent — say this marks the end of new Labour, with 38 per cent disagreeing. Fifty-four per cent disagree with claims that these measures will “discourage entrepreneurship and wealth creation and damage the City”, with 38 per cent agreeing. Only 41 per cent think that this will reduce inequality.
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