U.K. Labour Said to Plan Tax on Firms Paying Over $425,000

(Bloomberg) -- The U.K.’s opposition Labour Party will introduce a tax on companies that pay staff more than 330,000 pounds ($425,000) a year if it wins the June 8 general election, according to a person familiar with the plans.

Party leader Jeremy Corbyn will unveil the proposed levy on Tuesday as part of a range of policies intended to “reverse” seven years of government by Prime Minister Theresa May’s Conservative Party, which he says has favored the rich over those in need.

Under the plan, companies would be charged 2.5 percent on earnings over 330,000 pounds and 5 percent on compensation packages worth more than 500,000 pounds, according to the person, who asked not to be identified because the plans are still private. The proposal targets employers, rather than employees, to discourage them from awarding excessive pay, the person said.

“People want a country run for the many not the few and for the last seven years, our people have lived through the opposite -- a Britain run for the rich, the elite and the vested interests,” Corbyn will say, according to speech extracts released by his office. “They have benefited from tax cuts and bumper salaries while millions have struggled and been held back.”

Labour is lagging behind May’s Conservatives by almost 20 percentage points in polls. Corbyn will seek to rally support behind an agenda of increased taxes for the wealthy -- including income-tax rises for those earning more than 80,000 pounds a year -- and more spending on public services. He will say Labour is offering a “radical and responsible” program that will put “the preservation of jobs first” as Britain leaves the European Union, according to the speech excerpts.

‘Modest Sum’

“We will be asking the top earners, the top 5 percent to pay a modest sum more,” Labour’s finance spokesman, John McDonnell, told BBC Radio 4 on Tuesday. “So that we don’t have nurses having their pay cut, having to go to food banks.”

McDonnell also said measures to renationalize water companies are necessary. While the party has no costing for the move as yet, he said, “there are models that can be used that minimize the overall cost but maximize the advantages of bringing it back into public ownership.” One of these could include a switch from shares to bonds, he said.

“The record proves one thing: The Tories are still the nasty party, the party of prejudice, the party of the rich, the party of the tight-fisted and the mean-spirited,” Corbyn will say. “Children growing up in poverty; students leaving college burdened with debt; workers who have gone years without a real pay rise coping with stretched family budgets. Labour’s mission, over the next five years, is to change all that.”

Television Debates

Corbyn also will challenge May to “come out of hiding” and take part in television debates, which would give him a platform to communicate directly with voters.

“I am confident that once the people of Britain have the chance to hear our promises and plans, they will decide now is the time for Labour,” Corbyn will say. “Let’s have that debate on television so millions can make up their minds.”

May’s party poured scorn on Labour’s manifesto, much of which was leaked to newspapers last week, and questioned Corbyn’s credibility as a leader capable of guiding Britain through its divorce from the EU.

“Jeremy Corbyn’s policies are a shambles and he simply doesn’t have what it takes to lead our country through Brexit and beyond,” Chief Secretary to the Treasury David Gauke said in an emailed statement. “It is not worth taking the risk,” Gauke said. “It’s ordinary working people who will pay for the chaos of Corbyn.”

--With assistance from Robert Hutton and Svenja O'Donnell

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Eddie Buckle