Businesses call for 50p top tax rate to be scrapped

 

Charlie Mullins, Pimlico Plumbers founder, said the 50p tax rate was stopping firms from expanding and had seen the government lose £500m in the amount of tax collected.

Related Stories

More than 500 business leaders have called for the 50p top rate of tax to be scrapped in next month's Budget.

In a letter to the Daily Telegraph, they said it was reducing government income and damaging the economy.

The entrepreneurs accused Chancellor George Osborne of putting "populist politics before sound economics".

Mr Osborne has said the 50p rate is a temporary measure and has asked officials to assess how much extra revenue it actually brings in.

There is speculation that wealthy tax payers find ways of avoiding it.

'Awkward position'

The letter, from the owners of 537 small and medium-sized businesses, said: "Given the current state of the UK economy, we urge the chancellor to urgently consider scrapping the top rate of tax in his forthcoming Budget.

"The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.

"We believe the richest should help the poorest in society. 1% of taxpayers are forecast to contribute nearly 24% of income taxes.

"But penalising high earners through an unfair, politically-motivated tax puts populist politics before sound economics."

The letter adds: "The result is that the 50p tax is set to reduce government income and damage the economy, the public services and charitable giving."

Tricky decision

One of the signatories, Tony Stein, director at Canterbury Care, said the rate was a disincentive to job creation.

He said: "Times are hard and reducing the resources available to entrepreneurs to reinvest in new business is the wrong outcome for the country."

Business leaders are funding a campaign against the tax rate of 50p in the pound.

Last September, the campaign organised a letter signed by a group of leading economists.

BBC chief economics correspondent Hugh Pym says the decision of when to end the 50p rate will be tricky.

Some people argue that when there is a public sector pay freeze it is wrong to be helping the richest in society.

'No timetable'

Shadow chief secretary to the Treasury, Rachel Reeves, said now was not the time to do away with the 50p rate.

"When millions of families and pensioners on middle and low incomes are being squeezed by the VAT rise and cuts to tax credits, cutting taxes only for the richest 1% cannot be the right priority now," she said.

"But these business owners are right to call on the government to take action to stimulate growth and jobs in our economy.

"That's why Labour is calling on the chancellor to use the almost £1bn unspent from his failed national insurance holiday to give a tax break to all small firms taking on extra workers."

The rate, introduced by Labour, is levied on earnings above £150,000 a year.

A Treasury spokesman said: "We have said we regard 50p as temporary and have asked HMRC to report on its effectiveness. We have not set out a timetable for any change in policy."

Sir Martin Sorrell, chief executive of the global advertising firm WPP, told BBC Radio 4's Today programme: "The government is trying to reduce the rate of increase in spending, or even cut spending, and in these circumstances it's understandable that taxes would be at higher levels than in more normal circumstances.

"Having said that, if you asked my personal view, I would like to see the tax rate lower."

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -27

    Comment number 255.

    High tax rates are very harmful to the economy. The best talent and investment goes elsewhere and the government raises less revenue, not more. The lessons of the 60s and 70s have apparently been forgotten - when the top rate of tax comes down, the wealthy pay more tax.

  • rate this
    +17

    Comment number 238.

    I'm far from wealthy but I'll only support a tax system that is utterly fair, everyone pays the same rate above the tax free allowance. If the rate's supposed to be 20% then someone on £100k will pay ~£20k in tax. where someone on £10k pays £400 (assuming a tax-free of £8000). I know it's nice to penalise the rich and successful but it isn't fair so those affected will easily find tax dodges.

  • rate this
    +44

    Comment number 193.

    If we're going to alter the tax paid on earnings lets make sure its also fully paid on share options and that TAX HAVENS are shut down on a global scale. Then I've absolutely no problem with a 33% flat tax for most people.

  • rate this
    +78

    Comment number 172.

    The problem is not the tax rate, it's the rate of tax avoidance. Close loopholes first, THEN raise tax rates if you need to.

  • rate this
    +25

    Comment number 138.

    Cut taxes. Good idea, provided the way it is done is fair. My suggestion would be that tax loopholes are closed and that the money "clawed back" is used to increase the personal allowance. Couple that to a tax rule that says no-one allowed to pay less percentage tax on their "real" income than PAYE would inflict on an average Joe and the tax system might be close to being fair.

 

Comments 5 of 10

 

More Politics stories

RSS

Features

  • Peaky Blinders publicity shotBrum do

    Why is the Birmingham accent so difficult to mimic?


  • Oliver CromwellA brief history

    The 900 year story behind the creation of a UK parliament


  • Image of Ankor Wat using lidarJungle Atlantis

    How lasers have revealed an ancient city beneath the forest


  • TheatreBard taste? Watch

    Are trailer videos on social media spoiling theatre?


  • Agents with the US Secret Service, such as this one, are responsible for guarding the presidentHard at work

    White House break-in adds to Secret Service woes


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.