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16/03/2012
Top Tax Rate Poised To Be Slashed
George Osborne is set to slash the top rate of tax from 50p to 40p.
It is a move that would please businesses and the Tory right but also risks reinforcing the Conservatives' reputation as protectors of the super-rich.
Government sources say that from the outset the chancellor has seen a cut in the 50p rate as the headline-grabbing measure of the budget, and views it as the simplest single step he can take to show his commitment to an enterprise economy.
The rate had been 40p since 1998 until Labour introduced the 50p rate in 2010. They had originally projected the rise would bring in £2.6 billion. However a study conducted by Customs & Excise for the Treasury is expected to show that the 50p rate, for earnings of more than £150,000 a year, is bringing in hundreds of millions, rather than billions, of pounds.
In exchange for supporting the proposed tax cut the Liberal Demcrat are pressing for a large increase in the personal allowance for those in work, a commitment to a wealth tax based on property, and a series of measures that end tax reliefs for the rich. They are also making it clear that the distributional effect of the budget as a whole must be seen to be progressive in that the rich pay more than the poor.
A government source said: "The budget has to strike a balance. It has to show we are all in this together, but it also has to show that as a country we are open for business. We want a top rate that does not put off entrepreneurs or businesses. It is one of the highest top rates worldwide at a time when we need real growth. Above all, real growth is what we need to promote wealth and prosperity." The source said the deal on the 50p was not yet done and dusted, but was close to being so.
(H)
It is a move that would please businesses and the Tory right but also risks reinforcing the Conservatives' reputation as protectors of the super-rich.
Government sources say that from the outset the chancellor has seen a cut in the 50p rate as the headline-grabbing measure of the budget, and views it as the simplest single step he can take to show his commitment to an enterprise economy.
The rate had been 40p since 1998 until Labour introduced the 50p rate in 2010. They had originally projected the rise would bring in £2.6 billion. However a study conducted by Customs & Excise for the Treasury is expected to show that the 50p rate, for earnings of more than £150,000 a year, is bringing in hundreds of millions, rather than billions, of pounds.
In exchange for supporting the proposed tax cut the Liberal Demcrat are pressing for a large increase in the personal allowance for those in work, a commitment to a wealth tax based on property, and a series of measures that end tax reliefs for the rich. They are also making it clear that the distributional effect of the budget as a whole must be seen to be progressive in that the rich pay more than the poor.
A government source said: "The budget has to strike a balance. It has to show we are all in this together, but it also has to show that as a country we are open for business. We want a top rate that does not put off entrepreneurs or businesses. It is one of the highest top rates worldwide at a time when we need real growth. Above all, real growth is what we need to promote wealth and prosperity." The source said the deal on the 50p was not yet done and dusted, but was close to being so.
(H)
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