The Cost of Labour: Estimating the Employment Effects of Labour’s Tax Policies

New economic analysis suggests that, if elected, the Labour party tax policies could cost the UK over 300,000 jobs and more than £25 billion in GDP.

In The Cost of Labour, published on Monday 22 September by the Centre for Policy Studies, Head of Economic Research, Adam Memon, estimates the potential cost to the UK economy of Labour’s tax policy proposals.

The report calculates that, if elected in the upcoming general election, Labour’s announced policies could result in 306,500 fewer jobs over the following four years.

The report derives this economic impact from the follow ten major tax policies promised by the Labour party:

1. Increasing the Corporation Tax rate from 20% to 21%.
2. Increasing the top rate of Income Tax from 45% to 50%.
3. Reintroducing a 50% payroll tax on bank bonuses.
4. Increasing the levy on bank balance sheets.
5. Introducing a tax on houses worth above £2 million.
6. Imposing a levy on the profits of payday lenders.
7. Reintroducing Stamp Duty Reserve Tax.
8. Introducing a Financial Transactions Tax.
9. Introducing a new 10% Income Tax rate.
10. Cutting and freezing Business Rates.

Memon concludes, “Whilst there may be reasons to increase taxes, perhaps to improve the fiscal balance or for redistributive purposes, the consequences for GDP and employment will be negative.”

Media Impact:

In Print:

• The Times: “The right-wing Centre for Policy Studies has examined the impact of ten key policies put forward by Ed Miliband, including raising corporation tax by one percentage point to 20 per cent and increasing the highest rate of income tax to 50 per cent.”
• The Daily Telegraph: “A report today from the Centre for Policy Studies calculates that Labour’s tax proposals could result in 306,500 fewer jobs over the following four years.”
• The Daily telegraph: “It is clear that Labour plans to increase the tax burden significantly,” said Adam Memon, head of economic research at the CPS.”
• The Sun: “the Centre for Policy Studies think-tank said that, taken together, Labour’s planned tax policies could cost the UK more than 300,000 jobs and £25billion in GDP.”
• The Sun: “Adam Memon of the Centre for Policy Studies, said : “The rhetoric of a big minimum wage rise is not really matched by reality.””

Online:

• The Daily Mail: ‘I’ll keep the Tory child benefit cap, says Ed Balls in U-turn after four years of attacking Osborne’s strategy
• The Daily Mail: ‘Labour must not flinch from tough decisions’: Ed Balls defends child benefit cap but party’s candidates want tax rises
• The Times: Balls pledge to freeze child benefit amid £8 wage row
• City A.M.: Ed Miliband’s conference speech: Here’s what you need to know
• The Express: Labour’s policies would wreck our growing economy
• The Daily Telegraph: Labour has not learnt the lessons of the past
• Conservative Home: Balls sings a song of savings, does a dance of deficit reduction, then leaves the stage to spend, spend, spend
• The Yorkshire Post: Balls outlines Labour plan to regain trust
• The Daily Telegraph: Take a leaf out of Dubai’s book, or the rest of the world will leave UK for dust
• Economia: Labour £8 minimum wage could cost jobs
• Share The Facts: Labour’s Tax Hikes Could Cost 375,000 Jobs
• The Daily Mail: My mansion tax will save NHS, says Ed Balls…as he finally says sorry over immigration and not regulating the banks
• The Daily Mail: I’ll scrap married tax allowance and cap child benefit at 1%: Ed Balls pitches for family vote but warns of ‘tough decisions’
• CNBC Europe: figures from the centre for policy studies
• The Yorkshire Post: Adam Memon: Balls’s taxes miss the point and hit jobs
• The Yorkshire Post: Labour failing economic tests
• The HR Director: Estimating the employment effects of Labour’s Tax Policies

Adam Memon - Monday, 22nd September, 2014