John McDonnell said the Institute for Fiscal Studies failed to look at the complete Labour policy before passing judgement on its manifesto.
The shadow chancellor told talkRADIO’s Mike Graham the research institute “got it wrong” when it described Labour’s tax plans as “not credible”.
“We’re saying very clearly we are increasing income tax on the top five per cent of the earners. We’re saying 95 per cent of people will not have their income rates increased or the VAT or National Insurance,” he said.
“We are saying to corporations you’ve had large tax cuts over the last 10 years, you haven’t invested in the way you should, we’re reversing some of those tax cuts. You’ll still be competitive internationally but we’re reversing some of those.”
On Thursday Jeremy Corbyn launched his party’s manifesto that included a pay rise for the public sector and an increase in the minimum wage.
The Labour leader said the plan can be paid for by increasing corporation tax and taxes on the top five per cent of earners.
However the director of the Institute for Fiscal Studies, Paul Johnson, told talkRADIO’s Julia Hartley Brewer the Labour plan would take “public spending to its highest peace time level ever”.
“If you really were to increase taxes as they suggest on companies that would take company taxation in the UK to the highest in the G7 and almost the highest in all of the countries in the advanced world.”
Mr McDonnell has defended the spending pledges as essential after nine years of Conservative government.
“We do need to send more and it is big because the challenges are big and because we’ve had ten years of austerity and we cannot allow the housing crisis to go on,” he said.
“We cannot allow our schools to be literally begging for funds for basic and we cannot allow our NHS to be in this crisis. We’ve got to fund it properly.”
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