THE TOP rate of tax drives high earners to leave the UK or use innovative accounting techniques, reducing tax revenues over the coming years and damaging the economy’s performance, a new report from the Centre for economics and business studies (Cebr) warned yesterday.
The government will gain around £2.5bn from the 50 per cent tax on incomes over £150,000 in this financial year, but that will become negative in 2013/14 and lose £1bn per year from 2015, the report claimed.
In a highly globalised economy, it is not possible to tax the wealthy effectively, the Cebr argued, pointing to surveys showing 56 per cent of UK-based millionaires are not certain they will stay in the country.
The international nature of financial services means taxes can be avoided with little difficulty. “Income tax has largely become a voluntary tax for high earners,” the report claimed.