David Ruffley MP writes about a new campaign to scrap the 50p tax band.
The 50p rate proves “we’re all in this together”. Or so leading modernisers will have you believe. But they’re wrong, as five hundred entrepreneurs reminded us in a letter in today’s The Daily Telegraph. They urge George Osborne to abolish the 50p top rate of income tax in this month’s Budget.
Waiting until 2014 or 2015 to scrap it is risky. If the Chancellor leaves it that late, the 50p rate will have done still more damage to the economy. It could also become a political football at the General Election. Much better to get it out of the way now.
It is true that some opinion polls last year showed that the 50p tax rate had public support. But would the public be quite so supportive if they were reminded that without the drive and energy of successful entrepreneurs, jobs and growth decline?
Labour introduced the 50p rate in 2010, largely for class war reasons in their desperate search for votes. George Osborne, boxed in, judged that he could not be seen to cut tax for “the rich” given that his priority was to build support for reducing the biggest deficit in British peacetime history.
But he must now listen to the 500 entrepreneurs against 50p as he constructs this month’s Budget. Whilst this most political of Chancellors will be concerned about “the optics” of cutting tax at a time of national austerity, he has already laid the ground for scrapping the 50p tax rate.
He has said it must be a temporary measure and it must not harm the UK’s international tax competitiveness. With a top marginal income tax rate of 17% in Hong Kong and 20% in Singapore, our 50% marginal rate does not look very competitive.