Labour’s tax debate rages on

The surprise frontrunner in the Labour leadership contest has attracted criticism from within his own party for his radical tax policies.

Jeremy Corbyn, who has emerged as the unlikely favourite to become the next leader, has suggested his priorities would include increasing the top rate of income tax and cracking down on tax avoidance.

But this week, the Shadow Chancellor Chris Leslie claimed that Mr Corbyn’s economic policies lacked credibility.

He cast particular doubt that £120billion could be raised by bringing in tougher rules on tax avoidance, arguing that the figure had been “plucked from thin air.” Mr Leslie also suggested that the policies could have the effect of pushing up interest rates and inflation.

The bitter exchanges are part of the general confusion surrounding Labour’s position on tax.

After being installed as George Osborne’s opposite number, Mr Leslie was quick to ditch some of the party’s marquee manifesto commitments – including support for a 50p rate of income tax and a so-called “mansion tax” on homes worth more than £2million.

Despite this a number of the leadership hopefuls, including Mr Corbyn, have signalled their backing for the proposals and could well reinstate them as party policy before the end of the year.

Interestingly, there is a less well-publicised but rapidly growing debate about tax within the Tory party as well.

Mr Osborne, increasingly being talked about as a future Conservative leader, was forced to resist calls from his potential rival Boris Johnson to cut the top rate of tax to 40p in the Budget last month.

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