UK Politics

Lawson adds voice to calls to ditch 50p tax rate

Lord Lawson
Image caption In a BBC interview, Lord Lawson called for the top rate tax to be dropped as soon as possible

Former Conservative chancellor Lord Lawson has added his voice to calls for the top 50p income tax rate to be ditched as soon as possible.

He said the rate was "foolish" and "very dangerous" to the UK's economic competitiveness.

This week 20 prominent economists said the tax on every pound earned over £150,000 should be axed at the earliest opportunity to boost growth.

Critics say cutting the top rate at a time of spending cuts would be unfair.

Ministers say although the 50p rate - which affects about 310,000 people - is temporary, they plan to increase the income tax threshold to £10,000 first.

Lord Lawson, who as Margaret Thatcher's chancellor cut the top tax rate from 60p to 40p in the pound in 1988, told BBC Radio 4's The Week in Westminster the 50p rate had to go.

He said: "The politics are slightly difficult but I think it should be done. It would be extremely beneficial to the economy. I don't think it would cost the exchequer any money at all.

"And you have to remember that when I brought [the] top rate down to 40% - 40 pence in the pound - it was then the lowest rate.

Media playback is unsupported on your device
Media captionNigel Lawson: 50p tax rate "very dangerous, very unwise, very foolish"

"Other countries followed, so not only has that advantage gone but we are now at a disadvantage with all our major competitors because they all have top rates which are less than ours. And that is very dangerous, very unwise, very foolish."

The economists' call to cut the tax was contained in a letter to the Financial Times.

The signatories included two former members of the Bank of England's monetary policy committee, DeAnne Julius and Sushil Wadhwani.

It was part of a campaign which they said was funded by businesses concerned about the impact of the 50p rate.

The economists argued that the tax rate was making the UK "less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers".

The previous Labour government introduced the 50p tax rate on high earners - it was forecast to raise £1.3bn in 2010-11, £3.1bn in 2011-12 and £2.7bn in 2012-13.

Chancellor George Osborne decided to keep it in his first two budgets but told the BBC last month: "I've said with the 50p rate I don't see that as a lasting tax rate for Britain because it's very uncompetitive internationally."

Around the BBC

Related Internet links

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