By Ian Dunt
Ed Miliband's audacious tax proposals were slammed by Britain's leading economic experts today as "a remarkable failure to learn from history".
The Labour leader shocked Westminster this morning when he suggested he would use a mansion tax on properties worth over £2 million to pay for a new 10p bottom rate of income tax.
The policy is political ingenious, because it distances him from his Brownite past and steals key populist policies from the Liberal Democrats and the Tories.
But experts at the respected Institute for Fiscal Studies (IFS) treated the proposals harshly.
"The proposal for a new 10p starting rate of income tax has no plausible economic justification," the institute found.
"It would complicate the income tax system and achieve nothing that could not be better achieved in other ways.
"To have observed lower starting rates of tax being introduced and abolished by governments of both complexions over the last three decades and then to propose the same thing again suggests a remarkable failure to learn from history."
The think tank said the same progressive aims could be accomplished by increasing the personal allowance or lifting the point at which individuals start paying employee national insurance contributions.
On the mansion tax proposals, the IFS said the system was a bandage over the fundamentally regressive council tax system which under-taxes valuable properties.
"Rather than adding a mansion tax on top of an unreformed and deficient council tax, it would be better to reform council tax itself to make it proportional to current property values," the think tank said.
The institute also questioned whether Labour would be able to raise enougn revenue through the mansion tax to fund the income tax proposal.
"Reintroducing Labour's 10p rate in full would reduce tax revenues by around £7 billion a year and benefit basic rate taxpayers by up to £271 a year, though it is unlikely that anything close to this amount could be raised through a mansion tax alone," it said.
Labour said the speech was not a detailed financial proposal and that clearer calculations would be available later.
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By Ian Dunt