U.K. Wealth Tax Proposed by Labour Leadership Contender Smith

  • Corbyn challenger pledges to raise top income-tax rate to 50%
  • Smith calls for Brexit deal to be ‘put to the people’ in vote

Owen Smith, the man challenging Jeremy Corbyn for the leadership of the U.K.’s main opposition Labour Party, proposed a new wealth tax and a higher top rate of income tax as he set out his policies.

Speaking in Orgreave, northern England, Smith said he’d increase income tax for people earning more than 150,000 pounds ($197,000) a year to 50 percent from 45 percent and levy a 15 percent charge on investment earnings for those top-rate taxpayers, raising 3 billion pounds a year.

Smith also pledged to reverse cuts to inheritance tax and capital-gains tax and stop reducing corporation tax. He launched a challenge for the leadership after Corbyn, who espouses many traditional socialist policies, lost the confidence of most of Labour’s members of Parliament. The incumbent, though, remains popular among the party’s grassroots and is the favorite with bookmakers to win a vote among party members over the next few weeks.

“We need a revolution,” Smith said Wednesday. “Not some misty-eyed, romantic notion of revolution, where we’re going to overthrow capitalism and return to a socialist nirvana. But a cold-eyed, practical, socialist revolution.”

Even though the next scheduled general election is four years away, Labour finds itself trailing the Conservatives under new Prime Minister Theresa May by as many as 16 percentage points in polls published this week.

Second Referendum

On Britain’s vote last month to quit the European Union, Smith said he wants any Brexit deal to be “put to the people,” either in a second referendum where staying in the 28-nation bloc is an option, or in a general election, where he said he would campaign for the U.K. to remain part of the EU. Corbyn has said he wants to respect the referendum result.

“Labour represents 9 million people in this country,” Smith said. “A majority of them voted to remain in the EU. We’ve got to fight during this negotiation.”

Among other policy announcements, including plans to scrap so-called zero-hours contracts and remove a freeze on public-sector pay, Smith said he would bring an end to austerity and attacked Corbyn’s performance against May during her first parliamentary questions session last week, during which she mocked Corbyn’s leadership.

“It pained me that we didn’t have the strength, the power and the vitality to smash her back on her heels,” he said.

Smith is scheduled to debate Corbyn head-to-head in Cardiff on Aug. 4 and further such events are due to be announced. Ballots for the contest will be sent out during the week beginning Aug. 22, with votes due in by Sept. 21. The winner of the contest will be announced on Sept. 24 in Liverpool, northwest England.

Bookmaker Ladbrokes Plc has Corbyn as the 1/5 favorite to win the leadership contest, meaning a successful five-pound bet would yield a one-pound profit, while Smith is on 7/2.

    Before it's here, it's on the Bloomberg Terminal.