By Tim Shipman
Last updated at 8:42 AM on 15th August 2011
Tax scrapped: George Osborne plans to scrap the 50p tax rate
George Osborne has confirmed that he wants to scrap the 50p top rate of tax because it is not raising much money.
The Chancellor has branded the 50p rate 'uncompetitive' and said there was 'not much point' in having taxes that brought in little revenue.
In an interview at the weekend, he said the 50p rate risked driving wealth creators out of Britain at a time when they were needed to create jobs and boost growth.
The Chancellor's intervention will cheer Tory backbenchers but anger senior Liberal Democrats, who believe cutting taxes for the poor should be a priority.
HM Revenue & Customs officials are reviewing the 50p rate to see exactly how much money it raises – with the results due by January.
But the Chancellor indicated that early analysis of self assessment returns does not suggest the tax is raising much money.
'There's not much point in having taxes that are very economically inefficient,' he said.
'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, and people frankly can move.
'What is it actually raising? It's only been in operation for a year this tax, put in place by the last government.'
Ed Miliband, left, has argued to keep the 50p tax rate and Shadow chancellor Ed Balls, right, has suggested having it for those earning more than 100,000
The Mail revealed earlier this month that Treasury analysts believe the 50p tax rate will raise little money, because it spurs high earners to avoid tax altogether.
6,000 FOR EACH VOTE
Gordon Brown has topped a league table of MPs who provide the least value for money to the taxpayer.
The former Labour prime minister has voted just 33 times in the past financial year and has rarely been seen in the House of Commons.
When Mr Brown's 76,261 pay and 121,123 expenses are taken into account, it means that the taxpayer has paid nearly 6,000 for every time the former PM has cast his vote.
Their figures show that raising the top rate of tax on those earning more than 150,000 a year from the old rate of 40p in the pound to 45p would bring in 1.65billion a year
But increasing it to 50p would lead to diminishing returns, with only another 750 million at most.
Many senior officials around Mr Osborne and Robert Chote, head of the independent Office of Budget Responsibility, even believe the 50p rate will bring in almost nothing.
Downing Street and Treasury aides have already discussed the prospect of cutting the top rate in next March's budget.
But Nick Clegg, Vince Cable and Mr Osborne's deputy at the Treasury, Danny Alexander, have all denounced the suggestion that the government could cut the top rate to 45p.
The Daily Mail first revealed that the Chancellor had planned the cut on August 5
Mr Alexander said it was a notion from 'cloud cuckoo land'. He called for the coalition to prioritise instead the raising of the threshold at which people start paying income tax to 10,000.
Mr Cable has demanded a mansion tax be slapped on those with large homes. The Chancellor has already agreed to raise the tax threshold to 10,000 by the next election.
You would have thought that there was someone, at the very least, with some sense in the House wouldnt you. After the riots that have been caused by the growing divide between rich and poor it seems like they still havnt got a clue why the yobs did what they did. I dont condone any of it, but I understand the under current of feelings that it germinated from. We live in a country where 80% of the wealth is owned by just 5% of the population !!! And yet, they still want more from us, while coming up with lame excuses not to contribute themselves. It seems like they will not be satisfied until we are all begging in the streets. Just a thought Mr Osbourne, while we have taxed the (British) motorists to the hilt. Why not tax the foreign vehicles when they enter the country. There must be thousands that enter every day for free, and yet as a lorry driver, when I go across to Europe, it costs me hundreds to travel. They even have double fuel tanks to bring enough cheap diesel with them
- Terry Blackburn, Welwyn Gdn City, UK, 16/8/2011 06:16
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