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Tax
Posted: April 2017

McDonnell hints high-earner tax reform will be Labour pledge

Shadow chancellor John McDonnell has indicated Labour will make tax reform for high earners a part of its manifesto ahead of the general election in June.

Speaking this morning on BBC’s Today programme, McDonnell (pictured) said said he wants to ensure the ‘rich pay their share’ and said the tax burden has fallen too heavily on middle earners.

The shadow chancellor said Labour defined rich as earning above £70,000 a year.

‘We want a fair system of taxation to pay for our public services. I think there is a general view that middle and low earners are being hit very hard by income tax rises and the burden that is placed on them by stealth taxes. What we want is a system which is fair, so corporations and rich pay their fair share,’ he said.

McDonnell also said Labour will make a pay ratio part of its manifesto for the general election in June.

He said if elected Labour will introduce a system which means the maximum salaries of chief executives and directors are dependent on the average salary of their employees.

‘We have been arguing we will go for pay ratios in our campaign at the local elections,’ he told the BBC. ‘We have raised that we will use public procurement to secure pay ratios – a ratio in regards to the maximum that can be earned by directors and chief executives in relation to the average pay of their workers.’

McDonnell said this would not be a maximum cap, but there would be a cap depending on the salaries of the rest of the employees.

In February Labour leader Jeremy Corbyn said the party would back the introduction of a maximum wage cap. However, the party later said it would not back such a cap.