Shadow chancellor Ed Balls is planning to cut pension tax relief for those earning £150,000 a year. Labour was the government that gave us the 50% income tax for those earning £150,000 or more but unfortunately income tax is linked to pensions tax relief.
So whatever the top rate of tax you pay then you receive the same in pension tax relief, meaning that for every £100 one of the ultra-wealthy saved, they received £50 in tax relief.
The coalition reduced the highest tax rate to 45%, and therefore reduced pensions tax relief to 45%, but Labour wants to go a step further.
Balls said the mega-rich should only get 20% basic rate pension tax relief. This would save the Treasury £1 billion a year which Balls wants to put towards a job creation scheme for the long-term unemployed.
The £1 billion would create a 'job guarantee' for those people who have been unemployed for more than two years. The guarantee would see the government pay a minimum wage and national insurance contributions for six months for an unemployed person.
The government is more concerned with getting more people saving for their retirement and to save you need to be earning, so creating jobs has to be the start. Although there is uncertainty about what happens after the six month guarantee runs out.
The more jobs we have, the more people will be contributing and savings and in the long-term we should see a reduction in the state benefit bill. It's a long-term solution and the start is job creation.
I'd like to see Labour bring back Balls original idea of tax banker bonuses to raise £2 billion a year, that he wanted to use to fund a youth employment programme.
The wealthy have to pay their way. The UK is running on empty and the richest in society have to contribute more to help the poorest and help drag people out of poverty. Society will be the beneficiary in the end.