Tax rate controversy continues
A group of 20 economists have signed a letter calling for the UK’s 50 percent income tax rate on top earners to be scrapped because it is, they say, damaging the nation’s economy.
The letter claims that the rate, which is charged to those who earn over £150,000 per year, punishes entrepreneurship, and the signatories called for a more competitive tax structure to stimulate the economy.
The letter, which included the signatures of at least two former members of the Bank of England’s Monetary Policy Committee, said that the 50 percent rate “punishes wealth creation by imposing on entrepreneurs and business people a marginal tax rate in excess of 50 percent once national insurance contributions are added in. This is particularly damaging when the UK needs to create new businesses in new industries.”
However, Alistair Darling, the former chancellor who introduced the 50 percent rate in 2009, rejected the economists’ contentions, saying that it would be unfair to reduce the top rate before the banking crisis is resolved.
Mr. Darling did not rule out cutting the rate at some point in the future,m but he pointed out that taxpayers at lower rates have suffered more from the banking crisis than those paying top rates, saying that “To remove it [the top rate] today would be grossly unfair. If they [top rate payers] do not pay their taxes then it is poorer people who are going to pay.”
Labour, the Liberal Democrats and trade unions responded to the economists’ letter by calling for the 50 percent rate to be retained.
Besides Mr. Darling’s comments, Tim Farron, president of the Liberal Democrats said that scrapping the top rate would be “phenomenally immoral and send an appalling message to the overwhelming majority of hard-working people in this country.”
General secretary of the Trades Union Congress, Brendan Barber, said, “AT a time when cuts are biting hard and ordinary people are suffering the biggest squeeze on their living standards in years, the last thing we need is a handout to the wealthiest in our society.”
Current Chancellor George Osborne is on record as being in favor of getting rid of the 50 percent tax rate if it does not raise sufficient revenue, but no one expects that any change will come before 2013.
Category: All Financial News, Tax News
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.