Cutting the top rate of income tax has raised billions of pounds in extra revenues for the Treasury, chancellor George Osborne said today.
Speaking in the House of Commons earlier today, Osborne said that lowering the top rate from 50p to 45p raised an additional £8bn in its first year.
Osborne said the new revenue figures "completely" defied Labour's prediction that cutting the rate would cost £3bn and hand high-income earners an average £10,000 tax cut.
Income tax receipts from highest earners up £8bn to 28% of total paid in 1st year of 45p top rate, @HMRCgovuk stats released today show— George Osborne (@George_Osborne) March 1, 2016
HMRC projections published in 2014 estimated that the tax cut had netted another £9bn for the Treasury in the 2013-2014 tax year.
"Under this government the richest pay a higher proportion of income tax than under the last Labour government," Osborne told MPs today. "Indeed we have just had numbers out this morning from HMRC which for the first time show the income tax data for the year 2013/14, which is when the 50p rate was reduced to 45p.
"And what that shows is that actually there was an £8bn increase in revenues from additional rate taxpayers, which completely defies the predictions made by the Labour party at the time and shows that what we have are lower, competitive taxes that are paid by all."
Osborne announced he would cut the top rate of tax to 45p for people earning more than £150,000 per year in the 2012 Budget.
Labour's shadow chancellor John McDonnell, meanwhile, rejected Osborne's statement and the HMRC numbers, saying, "No one seriously believes these fantasy figures from George Osborne".
"The truth is that the delay in implementing the 45p rate probably allowed significant time for many wealthy people to structure their tax arrangements so that they could simply pay it at the chancellor's new lower rate," McDonnell added.
"Now George Osborne is trying to hide the fact that this was really a giveaway to people at the top while everyone else pays more."
McDonnell is unlikely to have the support of all of Labour's MPs. In the last government, former Labour leader Ed Miliband proposed bringing the top rate back up to 50p. Yet in a speech in Canary Wharf after last year's General Election, then-shadow chancellor Chris Leslie indicated that the party had moved on, and would instead focus its efforts on stopping Osborne from cutting the current 45p rate.