Labour’s flagship election tax plans will harm UK economy, experts warn

LABOUR’S proposed income tax hike for the top five per cent of earners would harm the economy, experts warned last night.

A manifesto vow to target those paid more than £80,000 a year will be unveiled today by Shadow Chancellor John McDonnell.

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But it is “beset with problems”, said the Institute of Economic Affairs’ director general Mark Littlewood.

“It’s a disincentive to investment and enterprise,” he added.

“The plan lacks economic credibility and would undermine growth.

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“Historically, punitively high levels of income tax have led to less revenue coming into the Treasury as avoidance increases.”

Mr McDonnell will today also guarantee to rule out rises in the standard VAT rate and personal national ins­urance contributions.

Treasury Chief Secretary David Gauke said: “Each family and business would pay for the tax and debt bomb Labour would drop on Britain.”

Last week Labour announced plans to launch a £1million tax grab on the middle classes by forcing thousands more to pay death duties.