Sunday, 14 August 2011

The 50p tax rate should stay

- at least until the UK finances are seen to be on the way to balance. Selectively reducing the contribution by higher earners will send the wrong signal to the citizenry who have been told: "we are all in this together". The rationale behind the move is said to be that the higher tax band provides "only" £750m.

If he is to ease direct taxation at all, Osborne should be working at the other end, and implement the coalition policy of taking the first £10,000 out of tax more quickly. This would provide a less inflationary stimulus to the economy, if that is what is felt to be necessary, than rewarding higher earners. It could even be paid for by the other taxation measures proposed by Vince Cable in the 2010 Liberal Democrat manifesto.

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