Tony Blair has knocked back Peter Hain's suggestion that high earners should pay more tax.
Commons leader Mr Hain said on Friday morning that too many average earners - including teachers and police officers - now fall into the 40% income tax band, and that top earners might have to fork out more to help.
Mr Blair, at the EU summit in Greece, asserted that the top rate of tax would not be raised and Mr Hain appeared to back down later on Friday.
Do you think there should be a higher top rate of income tax? Should the rich pay more to help those less well off?
This debate is now closed. Read a selection of your comments below.
The following comments reflect the balance of opinions we have received:
Having precise tax bands means people who fall just in the 40% rate lose out. Why not have a sliding scale, almost like a means tested tax level?
Adam Sanders, UK
These "rich" people have earned their money. They at some point or another have worked for it and why, just because they have been successful, should they be penalised? There is no better way for a country to discourage good business than to make it unprofitable for someone to make money. Why should someone who works really hard pay for someone who just lives off the government?
There may well be justification for higher taxes on the super rich but I wouldn't support this until the Government takes meaningful steps to reduce public expenditure on inefficient and unnecessary areas. The tax burden for everyone, whatever their salary, is already way too high. We need to have a proper debate about how we finance our future, less tax and more personal responsibility perhaps?
Sarah Savill, England
I'd like to see a scheme where on your tax-return you can voluntarily choose to pay extra taxes if you want to. The people who did volunteer to pay extra would have their names/addresses published. Somehow I think it would be a very short list.
David Moran, Scotland/Australia
People rich in money are rich in power too, which is often used to maintain their dominant position, influencing our government to deregulate to allow more exploitation and thus higher profits. Do we want non-elected, non-accountable powers to continue to dominate us? Thatcher's neoliberalism experiment turned one in ten people into one in FOUR below the poverty line. Middle income earners, the backbone of this country, are better off without the super-rich. A fairer distribution of wealth would reduce the number of people resorting to crime, unburden our prisons, increase spending power, allow more people to own homes, improve the quality of everyone's lives, and strengthen our economy for the future. Let the super rich leave - if they can tear themselves away from our facilities - and do their damage elsewhere. Britain will be better off.
Frazer Payne, UK
The conviction that high achievers are hard workers having made sacrifices might well be a myth as the only thing that matters to get anywhere in this country of free enterprise is the connections you've got. Also, profit margins appear to be indirectly proportional to honesty in transactions. Hence, might Tony have rejected Peter Hain's suggestions because they've come too close to home?
There seems to be some misunderstanding about how the top rate tax band works and proposed new band would also work. Opponents to tax changes exploit these misunderstandings. The 40% rate applies to the money earned above that the threshhold of £30,500. Anything below that is taxed as normal rate i.e. tax-free allowance, base rate of 10% and standard 22%. Some correspondents seem to think that people in the higher tax bands pay 40% on all income and those in the proposed 60% band would pay 60% on all income. If this were the case why would anybody accept a salary in the low £30k's when they would be better off on £30,499.
It's interesting that we keep talking about Peter Hain's suggestions as if they're a new thing.... except that it's exactly what the Lib Dems were saying they would do in their election campaign in 2001. But I think it is an excellent idea. The very fact that millions of people live on less shows that you don't need £40K a year or whatever to live on. I think the wealth in this country needs sharing more evenly, and getting the richest to supplement the poorest more than they already do is a plan which has my full support. It's a pity Blair's too cowardly to allow a debate on it... but then, isn't he in the upper tax band?
The very fact that millions of people live on less shows that you don't need £40K a year
Phil Evans, Keele, UK
I would be interested to know exactly how little tax high earners pay. In these days when politicians are afraid of the prospect of a media-led backlash against honest, open taxation policies, we are tending to get a lot of so-called "stealth taxes". We can blame this on dishonest politicians if we like, but in reality they are simply raising the money that is required to answer public demands for services. Personally, I would prefer to see taxation done honestly and openly, via such things as direct taxation of earnings. So long as the media and opposition politicians persist in reacting with synthetic anger at any attempt to do this, though, we will continue to have taxes via the back door, which of course are never as widely reported.
David Hazel, UK
I feel it is a liberty to even consider raising my taxes higher. What precisely have the less well off or the government ever done to take a single penny off me never mind 40% of my salary, then NI, then tax on everything I purchase. Hain has identified an interesting area here ie taxes are too high to begin with therefore this administration has nowhere left to turn once the stealth tax policies have run out (obviously efficiency in the public sector is too much to hope for).
Why raise taxes so that the government can squander more money? I think we should raise the taxes for MPs so that they are able to waste their own money rather than everyone else's, perhaps they'd be more careful with it then. If the government systems were more efficient then there would be no need for raising taxes, in fact they could probably lower them.
I think we should raise the taxes for MPs so that they are able to waste their own money rather than everyone else's
At present, high earners pay 40% of their income into the exchequer. To what extent would tax receipts be increased if this figure were 60%? Many of the workers in the City where the concentration of £100k+ incomes is highest are foreign nationals. There is no fundamental reason why they need to be based in the UK; if the tax regime were out of step with the rest of the world, these jobs would go elsewhere, and the taxman would cease to receive even the 40%.
The view that high achievers will leave for other shores if more severely taxed, leaving the rest of us worse off is one that I have been sympathetic to in the past. This country has however, got more than its fair share of asset-stripping financial sharks who go around robbing emerging enterprises of their value. The country would indeed be much better off if such people were given and incentive to "take their skills to other shores". A higher band of tax might make the UK less of a haven for those with such a selfish carpet-bagging mentality.
No way. What should happen actually is that EVERYBODY's taxes should be slashed. Too much tax money is wasted on an inefficient civil service, subsidising inefficient European farmers, bogus asylum seekers, ungrateful foreigners in the 3rd world and corrupt local councils. If governments stopped wasting so much money and spent tax more efficiently, taxes could be significantly cut, giving back a lot of money back to the public who rightfully earn it.
The Government should completely reform the tax system by introducing several different tax bands, rather than have just the standard and higher rate. For example make people who earn 100k-500k pay 42.5% tax, those who earn 500k-£1m should pay 45% and those who earn £1m+ should pay 50%. This would be supported by grass root labour voters and the extra money raised could be used to relieve some of the burden for middle England, like the re-introduction of student grants.
The Government should completely reform the tax system by introducing several different tax bands
As someone who spent 25 years in the 'tax' industry, I support Peter Hain was raising this issue. For far too long selfish and vested interests have subjected ordinary hardworking people the spurious mantra 'High Taxes Bad Taxes'. Everyone needs to be seen to pay their share, based on their disposable income. It may not gather in sacks full of cash, but it is just and morally defensible!
Roger Jacob, United Kingdom
I don't think the richer should pay more - they've worked harder to get where they are and they're taking less from the system in terms of benefit. Proportionately they pay far more than everyone else anyway, as 40% of £50,000 is far more than 10% of £10,000. So why hike it up even more so that more people can claim benefit?
I can understand were Peter Hain is coming from. A sole earner with a salary in the mid 30K with a young family would be in the higher tax bracket would struggle to get by. What is wrong with increasing tax on those earning more than 100K as they are getting a lot more from society than they put in.
richard davie, scotland
It is not a matter of should the rich pay a higher rate of tax, it is a matter of WILL they pay a higher rate of tax. Setting the top tax band too high will mean that many of those who have to pay it will leave for more prosperous shores, and those who don't currently have to pay it won't want to incur the penalty for climbing the career ladder. This spells disaster for our economy. Of course, this view reflects my assessment of human nature - I believe Darwin was right.
Setting the top tax band too high will mean that many who have to pay it will leave for more prosperous shores
I do not think that people who have worked hard to get where they are should be taxed higher. Let's encourage this way of life in Britain - not penalise it. These people are already contributing more than their fair share. I would say go and hunt out the thousands of people who lie in their beds all day and get a benefit cheque sent through their letter box (for nothing).
kcroad, New Zealand
Many people like myself in the south east of England are earning salaries around the level at which the higher tax threshold applies, yet cannot afford to buy houses. I think Mr. Hain's comments about average income earners are correct, and that an extra 5% on the salaries of high income earners is justified.
It is the middle income earners that are the backbone of the economy. I would't loose any sleep if so called super rich were to leave the country. We would simply create more. Let's raise tax for the highest earners to keep our society fair
It is the middle income earners that are the backbone of the economy
O Umoh, UK
I must confess my horror at the prospect of having to pay even more tax. I work in I.T. I have already taken a hit on the National Insurance and if Tax continues to rise I shall be seeking employmernt in the United States where, although I appreciate the society has problems, at least they encourage the induvidual to make the best of themselves and not rob professionals of thier remuneration for many hours sat at a desk!
Roger Burgess, England
Absolutely! After all, the majority of high earners are not worth the money. Premiership footballers are a classic example; they work 18 hours a week for which they get an extortionate wage. When you think about it, low pay is a form of taxation; no exeptional talent tax.
I have just completed my PhD studies at the age of 29 with "negative" savings. People at my age may have worked for ten years with house, car and family already. I am not "the rich" but have to pay 40% tax and 11% NI! Life is not fair.
A higher top rate of income tax may well be helpful and certainly a move to close the gap between rich and poor is a good idea. But I think getting a grip on the price of living is more useful to poorer people, so that the costs of everyday necessities; food, housing, transport etc. do not rapidly increase beyond the means of ordinary people.
Stuart Locke, London
Has it ever occurred to anyone to question the current thresholds for the tax bands? Even so called high earners are finding it extremely difficult to balance the books after tax when the average mortgage repayment is over £1000 per month. Why should those who work hard and tax less from the system have to contribute even more than the bloke who doesn't feel like applying for work because the dole is meeting all his needs!
Even so called high earners are finding it extremely difficult to balance the books after tax
Jacqueline Merritt, UK
The seriously wealthy should pay more - yes! How can it be right that someone earning £35,000 and people getting £1,000,000 a year are in exactly the same tax bracket? But with Tony Blair in charge the proposal had no chance anyway.
Adam Humphreys, England
Taxing the rich does not solve social inequality, never has and never will. It would be far better to seriously focus on the poor standards of our inner city secondary schools to enable our people to move on and upwards. If there is not enough to do this then raise the general level of taxation by a percent or so. If it is good enough for them then it is good enough for all! We can them get the chance to vote for/against it at the next election.
No! We live in a global economy, and tax hikes will simply cause successful entrepreneurs to go elsewhere; or foreign companies to not invest in the UK. We've already seen companies immigrated to the Far East for lower labour costs - do we really want to push them out more with tax rises?
Absolutely. Those who benefit most from a secure and stable society should pay most to sustain it. Thatcher, Major and Blair have turned this on its head because over the last 24 years the percentage paid by middle income and poor people has increased as governments have increased indirect taxes and national insurance and brought income tax down.
Those who benefit most from a secure and stable society should pay most to sustain it
The rich already pay more! Since taxation is a percentage, it follows that if you earn more, you pay more. It has always been unfair that someone who earns even just a penny over the threshold has to pay a higher percentage.
Tax, nobody likes it, rich or poor! Do the rich use the NHS more? I don't think so, most subscribe to private healthcare. Do they use state education more than the less fortunate? No, they send them to private schools. So how can we justify taxing them more? Get over it, life is not fair, you get out a fraction of what you put in. Remember at some point the vast majority of the "rich" made a huge sacrifice to be where they are, why is this never mentioned?
By spending their income higher earners create luxury good industries, and by saving they provide funds for investments. I earn £18k and I don't resent their 40p in the pound!
Steven Hitchen, France
The gap between the rich and the poor in this country has never been greater. That is a sign of an unhealthy society. Direct taxation is a very good way of reducing the, currently obscene, income gap.
John W, UK
Why do we want the top "earners" to stay in Britain anyway? My experience is that if you promote somebody to a top job they grow into it. Getting rid of the people who are paid more than they really earn only clears the dead wood.
Jerry Bushell, UK
Taxing the rich will bring in less money to the Treasury than now, which is probably not the intention. If it did happen then 'fat cat' payments will increase to balance the extra deductions or the clever people will go to foreign shores. The real problem is that the government are frittering away the increased tax; just look at the return on investment in the NHS and education; absolutely appalling. MPs should reduce their salaries for doing such a poor job!
Richard Philips, UK
An underlying essential is the honest and fair redistribution of wealth, and proportional taxation would be a step in the right direction. Those who can squander in a week more than some honest hardworking people earn in a year surely have no legitimate grounds for complaint if their taxes go up a bit, whether to lower the tax burden on the poor, or to fund better services to the entire community. The proportional difference in income between those on minimum wage and the highest earners cannot possibly reflect how much harder they work (even cumulatively).
An underlying essential is the honest and fair redistribution of wealth
This is completely the wrong thing to do. What they should do is scrap the 40% band completely and then merge income tax and NI so everyone pays 33% over the tax free limit. It would save money as tax returns become simpler and we won't need thousands of civil servants to administer it.
Andy Davies, UK
Absolutely not. Taxing success is a recipe for disaster, simply feeding the coffers of accountants and offshore entities as the rich attempt to protect their wealth, leading ultimately to their departure and the UK economy's eventual decline. The opposite should be happening, streamline taxation to one common level across rich and poor alike so that everyone pays the same percentage of their earnings.
Taxing success is a recipe for disaster
Anthony Newstead, United Kingdom
Anthony Newstead, United Kingdom
Why are people saying that higher taxes for higher earners doesn't work? It happens now!
There is a prevailing attitude that those who are successful should keep there good fortune for themselves. While I agree that we need to reward hard work and encourage those who have skills and talent to succeed, I feel it is important to note that 'where much is given much is expected'. I feel the wealthy should contribute more to society. In the long term it is in their interest to do so as it will help to create a balanced society.
Gordon Casey, UK/USA
I always thought of this government as one which taxes middle income earners whilst leaving the rich untouched. How else do you explain increasing NI (which many rich people don't pay because their income comes from sources other than salary) while leaving income tax unchanged?
Neal Hawman, UK
Why should someone calling himself a 'managing director' get to keep so much of his highly-inflated (self-assessed) salary? I have no problem with successful people keeping some of their earnings, but people are selfish. Do people realise how well off they are in Britain? I've lived in Russia for nine months now and the standard of living is appalling compared to Britain. More tax on the haves to give to the 'real' (i.e. not layabouts) have-nots both in Britain and in other countries. Let's set an example and not pander to American capitalism.
Do people realise how well off they are in Britain?
Chris, UK (in Russia)
Of course higher earners should pay more; it is a basic principle of fairness. As for those leaving the country, I assume they are also happy to waive their rights to any of the benefits their taxes would have paid for.
Income tax should be scrapped and replaced by collecting revenue through usage, purchase and pollution taxes - those who use more and damage the environment more should pay more.
Robert Steadman, U.K.
The rich should definitely pay more tax. Some of the salaries paid are obscene and should be taxed at 95p in the Pound.
Talla Hopper, England
Here we go again! The same old argument that we should not overly tax the rich because they are supposedly more enterprising than everyone else and should be allowed to keep more of their money. The only thing the rich are enterprising about is the way they dodge paying income tax. The rich should pay up!
The rich should pay up
I feel that the UK tax bands currently are extremely out of date.
In order to distribute wealth evenly across tax bands, the government could adjust the tax bands to ensure even allocations of income. Why is the tax band currently levied at £35,115? Would it not be more sensible to introduce sliding tax bands to suite the income earned ?
Why should I pay extra taxes? I have worked hard all my life, and made a lot of sacrifices to be were I am today. If my taxes continue to increase, I will move from Britain and take my company with me!
A Labour politician advocating redistribution of wealth? That takes me back.
David Osborne, UK
The words fair and tax should not be used in the same sentence. There is no such thing as a tax that is fair to all. The basic failing of the current income tax regime is that the thresholds are set far too low. Nobody can exist on the basic allowance and so the government introduces 'tax credits' to paper over the problem instead of raising the basic allowance to a liveable level and scrapping the unnecessary bureaucracy that accompanies its current policy.
The basic failing of the current income tax regime is that the thresholds are set far too low
When it is clearly difficult for many people to do better in life due to their social circumstances, I think it's only fair that those who are lucky enough to be able to achieve more should help those that can't. Otherwise society will ultimately separate into two distinct parts - the haves and the have-nots. People who don't earn a lot of money aren't always lazy.
Claire Heath, England
I am in the middle income bracket, but I don't think the rich should be taxed more. To be honest they pay enough tax as it is - 40% of their salary goes into taxes. This is fair enough, and any more would be excessive in my view. A lot of top executives have worked their way there, so why should they be penalised for doing so?
It will discourage people from working hard to get to the top. The British economy will suffer from lack of motivation.
A lot of people seem to be under the rather curious belief that "working hard" equates directly with how much money someone earns. Surely the recent trend (now partly reversing, finally) of giving outgoing bosses millions of pounds, whether they were successful or complete failures, shows that this is not so. I know plenty of people who work harder than all of the chairmen in London combined and they're still on the minimum wage. Let's not lie to ourselves that the harder the work, the more money you have.
Leo Condie, Scotland
People seem to think that the government has a vast amount of money that is being wasted by the public sector in the UK. Having been, until very recently, a civil servant I can assure you all that this is not the case. British workers pay amongst the lowest rates of income tax in Europe. As a direct result we do not enjoy a modern and efficient public health service like most other countries in Europe. The same could be said for public transport, education etc. If people want decent public services, they have to pay for them.
If people want decent public services, they have to pay for them
Patrick W, London
There should be just one rate of income tax 50% (which would include a merged National Insurance) and one tax threshold (e.g. £6000) set such that the government collects the same amount of money as it does with the current overcomplicated system. This would mean that the poorest would pay no tax and you wouldn't start paying until you had a 'reasonable' level of income.
If the Government was any where near as efficient as the private sector, there would be much more money to go around, taxes could be dropped, not raised. Don't steal more to cover costs, just use what you have more wisely. Is there anything in life as inefficient as a state owned service!?
R. Callister, UK
I agree with the minister on this one. At present there are
a string of differential rates of tax up to 35K, but then no distinction is made between someone earning £35K and someone earning £35 million per annum. There is little point in some people having much more money than they can sensibly spend and the net effect is inflation of housing prices at the top end.
There is little point in some people having much more money than they can sensibly spend
Peter M. Higgins,
Maybe the tax bands should be regionally set - someone earning £50K in Newcastle is pretty well off compared to someone earning £50K in London.
James Stevens, UK
Higher earners do pay more tax! 40% of 100k is more than 40% of 50k
Paul M, UK
How much do you have to earn to become a 'high earner' anyway?
Why should people be penalised for learning well enough to obtain a good job with salary to match. They deserve it!
Diane Sparreboom, The Netherlands
At last, a minister coming out with what all Labour supporters want to hear. If Labour isn't about fairness it isn't about anything and higher taxes for the rich are one way to achieve that fairness. Well done Peter Hain.
If Labour isn't about fairness it isn't about anything
Chris Booton, UK
There is perhaps some merit in the idea for inherited wealth but not for earned wealth, otherwise where is the incentive to achieve and do well? If implemented this idea could well re-activate the brain drain and leave this country poorer in the long term.
Derek Taylor, England
I earn a reasonable salary and it seems to me that I pay a very high amount of tax and N. It puts me off from furthering my career as I will be clobbered with more tax. The middle earners are always soft targets.
Middle earners are always soft targets
Julian Heathcote Hobbins, UK
Julian Heathcote Hobbins, UK
The 40% tax band is high enough. If as the article says, more people fall into it then the government gets more income anyway. Just because people earn more than £50,000 doesn't make them well off - with the cost of houses in the South, plus the need for private health and dental care people are still running tight budgets.
No, because most high earners have worked hard to get into a position where they can earn a higher wage.
I've never understood this. If someone works hard, educates themselves to get a better job, their reward is that they are taxed more. It makes no sense to me whatsoever. Now Labour want to tax the people who have bettered themselves, they did this in the 70s and the early Bransons of this country simply upped sticks and left abroad. It was called the 'Brain Drain' and this country took years to recover from that tax policy. It seems that they have learnt nothing.
Now Labour want to tax the people who have bettered themselves
I have recently left the UK job market to come and work in Spain. One of the main reasons for this was that I was a higher rate taxpayer in the UK, subject to more and more taxes directly and indirectly by this Labour government. I got sick of having my money wasted. So I have left. We all know that under this government middle and low incomes will not end up paying less at all.
In a utopian society this idea may work but we live in the real world. Raising tax rates for the few top earners will achieve nothing other than please the left wing of the Labour Party who still believe in the failed 70s doctrines of taxing the rich to death. It certainly won't raise any more money for the Exchequer.
Very wealthy people have access to options that regular members of the public do not have. These include a global employment market, which means that the best will simply leave for sunnier and less taxed countries.
Raising tax rates for the few top earners will achieve nothing other than please the left wing
We should learn from other high tax countries who have found that even though they increase tax rates they don't actually gain very much from it. The only people that gain are the tax advisor. Think about it - your tax bill goes up by £50,000 a year. Do you a) cheerfully pay up, or b) spend £10,000 a year on a sophisticated tax avoidance plan and actually end up paying less tax than before?
No! It would amount to a "success tax". Penalising those who have done well is a worthless idea. The government needs to readdress the way it is spending - or misspending - taxpayers' money, not engage in more asset stripping in order to paper over the cracks.
C. Hunter, England
Even though I vote Conservative, I think that these proposals constitute a good idea. Taxing the obscenely rich while lowering the high rate of tax on 'Middle England' would do much for this country.
Tim S, UK
What right has the government to "redistribute" people's earnings? If people want more money, they should get a better job rather than rely on the government to steal it for them from the pockets of those who work hard for their financial success.
Simon M, UK
This idea is the old and discredited socialist envy in action. Higher taxes do not enrich the poor. The Labour government did just that when Denis Healy was Chancellor, imposing a top rate of 98% - it proved a disaster, it sparked a massive brain drain, and Labour was kicked out at the following election and did not regain power until Tony Blair brought them back to their senses.
Higher taxes do not enrich the poor.
Rather than increase the amount of tax that high earners pay, stop paying out money to those who refuse to work.
The rich already do pay more tax. That's because tax is paid as a percentage of income. It's exactly this kind of thing that makes bright young graduates to take the decision to live abroad when they graduate. I know I have.
Bob Simmons, UK
In my view the only fair way of taxation across society is progressive direct taxation - the more you earn, the more you pay. And this should extend beyond 40% for very high earners. This doesn't have to mean fleecing high earners or ripping off the wealthy, but taking a fair view across the whole spectrum based on the ability to pay.
The only fair way of taxation across society is progressive direct taxation
It's about time high earners and fat cats paid more tax. They earn far more than they'll ever spend.
John H, UK
The problem with increasing tax for top earners is that these are the people who have control over the payroll for their companies. If tax went up by 20%, top wages would increase by 30% leaving, as always, junior staff, investors and pension funds out of pocket.
I think it's a very idealistic view. Having been a 40% tax payer (I am now unemployed) I did resent a large proportion of my income being taken. In order to get my "highly paid job" I had to go to university. I was fortunate to graduate before tuition fees were introduced, but still left with a sizeable student loan, which I have only just finished paying off, and I am now 30! Unfortunately not all people are equal.
Unfortunately not all people are equal
Christopher Livermore, UK
Christopher Livermore, UK
The higher earners are more internationally mobile and will just move country if you tax them more.
There are not enough rich people to make a significant difference to tax income for the government. If there were, don't you think the government would have already done it?
Moira Thomson, Aldershot - UK