50p tax rate for high earners could be cut, reports suggest
Tories’ Liberal Democrat partners in coalition would fight for measures to offset effect of 5p cut David Cameron and George Osborne could cut the 50p tax rate as soon as next April, it has been reported. Within the year, the prime minister and chancellor may move to cut 5p off tax for high earners, although the Liberal Democrat partners in the coalition will fight for measures that offset the effect of the cut at a time of when most people are having to tighten their belts. A succession of newspaper stories quoting often unnamed Conservative and government sources culminated when the Independent said a Treasury analysis suggests the 50p rate – introduced by Labour in 2009 – was generating only marginal returns for the exchequer. The paper said the difference between the 50p tax and a 45p tax might only be £750m a year. Rightwing Tories want the government to go further and reduce the rate to 40p, as it was until 2009. The Liberal Democrat chief secretary to the Treasury, Danny Alexander, has previously claimed wanting such a cut was living “in cloud-cuckoo land”, and the Independent report confirms that Lib Dems remain wary of the political consequences of sanctioning the move. According to the paper, Treasury projections suggest that up to 70% of the expected £2.4bn revenue generated from the 50p rate would still be collected at the 45p rate. At 50p, the incentive increases to retire earlier, emigrate, contribute more to a pension or invest in tax avoidance schemes, the report said. The Treasury is still waiting for the details of an assessment by HM Revenue and Customs into the amount actually raised in the first year to April 2011. A senior Conservative source said: “The decision is not about whether to do it, it’s about when to do it. One option is 2012, depending on the state of the economy, or 2013 at the latest. We want it to have come into effect by the time of the next election.” The source added that the move was likely to be sold as part of a “tax simplification package”. Another source, close to Osborne, is said to have sought to dampen the speculation. “We have no plans and no timetable,” he said. “We don’t like the tax, but we are not going to decide anything until we have seen the numbers.” Senior Liberal Democrat sources told the paper that any attempt to cut the tax burden of the very wealthy would be opposed by the party. “At a time when we are asking everyone to make sacrifices, this sends out totally the wrong signal,” one said. “The 50p rate was never our policy and we are not wedded to it – but any cut must be offset by other measures.” Tax and spending George Osborne David Cameron Conservatives Liberal-Conservative coalition Tax Income tax James Meikle guardian.co.uk
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50p tax rate for high earners could be cut, reports suggest
Tories’ Liberal Democrat partners in coalition would fight for measures to offset effect of 5p cut David Cameron and George Osborne could cut the 50p tax rate as soon as next April, it has been reported. Within the year, the prime minister and chancellor may move to cut 5p off tax for high earners, although the Liberal Democrat partners in the coalition will fight for measures that offset the effect of the cut at a time of when most people are having to tighten their belts. A succession of newspaper stories quoting often unnamed Conservative and government sources culminated when the Independent said a Treasury analysis suggests the 50p rate – introduced by Labour in 2009 – was generating only marginal returns for the exchequer. The paper said the difference between the 50p tax and a 45p tax might only be £750m a year. Rightwing Tories want the government to go further and reduce the rate to 40p, as it was until 2009. The Liberal Democrat chief secretary to the Treasury, Danny Alexander, has previously claimed wanting such a cut was living “in cloud-cuckoo land”, and the Independent report confirms that Lib Dems remain wary of the political consequences of sanctioning the move. According to the paper, Treasury projections suggest that up to 70% of the expected £2.4bn revenue generated from the 50p rate would still be collected at the 45p rate. At 50p, the incentive increases to retire earlier, emigrate, contribute more to a pension or invest in tax avoidance schemes, the report said. The Treasury is still waiting for the details of an assessment by HM Revenue and Customs into the amount actually raised in the first year to April 2011. A senior Conservative source said: “The decision is not about whether to do it, it’s about when to do it. One option is 2012, depending on the state of the economy, or 2013 at the latest. We want it to have come into effect by the time of the next election.” The source added that the move was likely to be sold as part of a “tax simplification package”. Another source, close to Osborne, is said to have sought to dampen the speculation. “We have no plans and no timetable,” he said. “We don’t like the tax, but we are not going to decide anything until we have seen the numbers.” Senior Liberal Democrat sources told the paper that any attempt to cut the tax burden of the very wealthy would be opposed by the party. “At a time when we are asking everyone to make sacrifices, this sends out totally the wrong signal,” one said. “The 50p rate was never our policy and we are not wedded to it – but any cut must be offset by other measures.” Tax and spending George Osborne David Cameron Conservatives Liberal-Conservative coalition Tax Income tax James Meikle guardian.co.uk
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50p tax rate for high earners could be cut, reports suggest
Tories’ Liberal Democrat partners in coalition would fight for measures to offset effect of 5p cut David Cameron and George Osborne could cut the 50p tax rate as soon as next April, it has been reported. Within the year, the prime minister and chancellor may move to cut 5p off tax for high earners, although the Liberal Democrat partners in the coalition will fight for measures that offset the effect of the cut at a time of when most people are having to tighten their belts. A succession of newspaper stories quoting often unnamed Conservative and government sources culminated when the Independent said a Treasury analysis suggests the 50p rate – introduced by Labour in 2009 – was generating only marginal returns for the exchequer. The paper said the difference between the 50p tax and a 45p tax might only be £750m a year. Rightwing Tories want the government to go further and reduce the rate to 40p, as it was until 2009. The Liberal Democrat chief secretary to the Treasury, Danny Alexander, has previously claimed wanting such a cut was living “in cloud-cuckoo land”, and the Independent report confirms that Lib Dems remain wary of the political consequences of sanctioning the move. According to the paper, Treasury projections suggest that up to 70% of the expected £2.4bn revenue generated from the 50p rate would still be collected at the 45p rate. At 50p, the incentive increases to retire earlier, emigrate, contribute more to a pension or invest in tax avoidance schemes, the report said. The Treasury is still waiting for the details of an assessment by HM Revenue and Customs into the amount actually raised in the first year to April 2011. A senior Conservative source said: “The decision is not about whether to do it, it’s about when to do it. One option is 2012, depending on the state of the economy, or 2013 at the latest. We want it to have come into effect by the time of the next election.” The source added that the move was likely to be sold as part of a “tax simplification package”. Another source, close to Osborne, is said to have sought to dampen the speculation. “We have no plans and no timetable,” he said. “We don’t like the tax, but we are not going to decide anything until we have seen the numbers.” Senior Liberal Democrat sources told the paper that any attempt to cut the tax burden of the very wealthy would be opposed by the party. “At a time when we are asking everyone to make sacrifices, this sends out totally the wrong signal,” one said. “The 50p rate was never our policy and we are not wedded to it – but any cut must be offset by other measures.” Tax and spending George Osborne David Cameron Conservatives Liberal-Conservative coalition Tax Income tax James Meikle guardian.co.uk
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