THE LABOUR Party has demanded a raid on tax relief that top earners are currently granted on their pension contributions – provoking an angry reaction from business chiefs.
Shadow chancellor Ed Balls said yesterday that the relief should be slashed from 50 per cent to 26 per cent.
“Ed Balls seems to think that this country’s wealth-creators can be squeezed indefinitely with increasingly punitive taxes,” the Institute for Directors said. “We cannot allow Britain to become a place which persecutes success.”
Balls had argued that Labour’s policy would ensure that “the broadest shoulders played their part in reducing the deficit”.
The de Vere group of financial advisers said that rumours of a multi-billion-pound raid on pensions in next week’s Budget has resulted in a “significant spike” in people asking about the possibility of transferring their pensions out of the UK.
Stephen Herring, a senior tax partner at BDO, told City A.M. that a reduction in the relief is “possible”, but added: “What makes it less likely is that it’s at a level that George Osborne introduced himself two years ago. Politicians tend not to like reversing their own policies.”
Responding to Labour’s pre-Budget recommendations, which also included support for the idea of a so-called “mansion tax” and a cut in VAT, the pro free-market Institute for Economic Affairs said: “[Labour] should focus on setting out a comprehensive plan for cutting spending much further. Letting business create more jobs, not proposing more taxes, is the key to closing the deficit and funding public services.”