WELL, everyone else has been having their say – what do you think? Is it a morally justified punishment on bankers who got us in this mess? Or a tax that our economy, and raises nothing for the Treasury? The 50p tax debate has been loud enough over the silly season not to get drowned out even by the riots. The chancellor said he wanted to scrap it; the deputy prime minister poured cold water on it.
All taxes are political to some extent, but the 50p tax is unusual in that it was introduced entirely for political reasons. It was a bear trap set by Gordon Brown for the Conservatives during the election campaign, wanting to paint Dave and George as tax cutters for the rich. The Tories declined the invitation to be ensnared, but the tax that was introduced as an election tactic remains in force.
There seems to be universal consensus among economists that it is economically damaging, and all the main business groups are opposed to it.
It discourages wealth creation and entrepreneurialism. International companies say it makes it difficult to persuade their top foreign workers to relocate to the UK. There are stories of companies that have decided not to make an investment here as a result of the tax. Banks say their wealth management divisions are seeing an exodus of capital overseas. The Institute for Fiscal Studies has said that it will not generate any revenue for the Treasury, partly as a result of tax avoidance. It is not even much of a tax on bankers, as 70 per cent who pay it live outside London.
The economic case is clear, and the chancellor has said he wants to abolish it – but that remains very politically tricky during a time of austerity and public sector pay freezes. It is that rare fiscal beast – a tax that is popular with the public, with 70 per cent supporting it. That means the closer to the next election we get, the more difficult it will be for the Chancellor to scrap it.
But corporate Britain has a role. Businesses from around the country concerned about the tax should speak out about what impact it is having on them – and on the wider economy. Only that way will the 50p debate be changed from punishment of the City and retribution against the rich, to encouraging growth and aspiration.
• Anthony Browne is a board member of theCityUK