UK: Tax rise for rich won't make society fair, says Mandelson

Lord Mandelson warned Labour yesterday not to impose big taxes on the rich during the recession as he urged the party not to revert to the "politics of envy".

At a Fabian Society conference entitled Fairness Doesn't Happen by Chance, the business secretary described as "ugly" the view prevalent in some Labour circles that politicians can promote fairness by "dragging down" the wealthy.

One Treasury minister, Angela Eagle, seemed to endorse a campaign to restrain the mega-rich. "We need markets in some sense, but I believe they need morals," she said, adding that a problem of the present system has been that "we are now subject to the risks created by the weakest links in regulation".

The Labour deputy leader, Harriet Harman, also insisted that the gap between rich and poor needed to be addressed, saying: "As we seek to build a fairer society in the future, there must be no return to the awful spectacle of directors of companies awarding themselves bonuses of hundreds of millions. No one seeks to defend that now and that sort of excess and greed has no place in the new social order of a fair and equal society."

Mandelson admitted there was a "tension" in the Labour party over tax. He said: "I think there is a tendency during the downturn to make the incomes of the wealthy a proxy for fairness, [to think] that if we are reducing the incomes or the wealth of the wealthy that it is somehow making us a more fair society.

"It is very important that we don't get ourselves into thinking that tax and tax on the highest paid in our society is a litmus test of social justice."

Mandelson insisted that he had supported the decision to raise the higher rate of income tax from 40% to 45% in last November's pre-budget report, saying it was necessary to "rebalance" the public finances in the medium term.

He also said it was vital that pay and bonuses for senior company executives were linked to performance. "We should not have a problem with high pay for high performance. I see nothing wrong at all with that.

"I think the politics of resentment just leads to the conclusion that it is OK to drag people down. I think that is ugly and I think it is self-defeating both in terms of our economy and our society."

Mandelson also said in the future there would be "less financial engineering and more real engineering in our economy".

"We will see our economy diversify away from an overdependency on financial services," he said.

http://www.guardian.co.uk/politics/2009/jan/19/taxandspending-economy

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UK: Tax rise for rich won't make society fair, says Mandelson

UK: Tax rise for rich won't make society fair, says Mandelson

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