50p Tax Rate, Again!Monday, March 5th, 2012
A brief history lesson:
- The Labour Party manifesto of 2005 pledged ‘we will not raise the basic or top rates of income tax in the next parliament’
- Alistair Darling announced in the Pre-Budget Report of 2008 that a new 45% tax rate would be introduced, targeting those earning over £150,000 from April 2011
- In fact, Budget 2009 announced that it would actually be 50% and would be introduced from April 2010. At the time, Mr Darling stressed that this would apply ‘while we resolve this situation’, referring to the economic conditions at that time
- On 23 April 2009, Shadow Chancellor George Osborne said that he did not agree that ‘higher marginal rates are good for this economy’ but stressed ‘I cannot promise to reverse the 50 per cent tax rate’
- Speaking as Chancellor in the 22 June Emergency Budget 2010, the 50% rate was confirmed as being effective April 2010
- In March 2011, the Adam Smith Institute called on the new Chancellor to abolish the 50p rate and reduce the Higher Rate to 35% in his first Spring Budget.
- However, even though Mr Osborne indicated that he felt the 50% tax rate could do ‘lasting damage’ to the economy, and even though he regarded it as ‘temporary, he was not willing to abolish it at that time in his Budget of 2011
As we approach Budget 2012, there are more calls for its abolition. Mr Boris Johnson said that the Additional Rate was damaging the City in July last year and now 537 businessmen have written an open letter to The Daily Telegraph. In this, they refer to the rate as further damaging the economy, accuse the Chancellor of putting ‘populist politics before sound economics’ and call for him to outline plans for its abolition.
I really must sit down and make my wish list of all the things that I would like to see mentioned in the Budget on 21 March. The 50p tax rate will either go or its existence confirmed. Plus, the raising of the £5,000 threshold for beneficial loans needs to be considered.
- The Daily Telegraph Website – ‘Abandon folly of 50p tax’