LABOUR’S ex-Treasury minister Kitty Ussher will today call on her party to propose alternative fiscal measures to replace the 50p top rate of income tax, such as cuts to tax-breaks on pensions for high-earners, or capital-gains tax on sales of primary residences.
And yesterday a Labour party-supporting economist and two former Bank of England officials prompted a political storm by calling for the end of the 50p top rate.
Labour party member Professor Keith Pilbeam of London’s City University was one of 20 like-minded academics – including former monetary policy committee voters DeAnne Julius and Sushil Wadhwani – to urge the government to ditch the 50p rate.
The twenty economists wrote in the Financial Times that the 50p rate “gives the UK one of the highest personal tax regimes in the industrialised world … making us less attractive as a destination for both foreign investment and talented workers.” They said the rate should be scrapped to stimulate growth.
Like Ussher, the Liberal Democrats are also believed to favour replacing the 50p rate with a tax on high-end properties. “That was in our manifesto, a levy on homes worth in excess of £2m,” a Liberal Democrat spokesperson told City A.M.
“And the coalition agreement clearly states that if there’s any money sloshing around, it should go to people at the bottom, or on middle incomes – so raising the tax threshold remains our priority.”
Liberal think tank Centre Forum said yesterday that it favoured moving from taxes on income to taxes on land. “The distribution of wealth is even more unequal than the distribution of income,” it argued.
Yet Brendan Barber of the Trades Union Council (TUC) said yesterday that scrapping the tax would be “monstrously unfair”. And shadow chancellor Ed Balls defended the 50p tax, introduced at the end of Labour’s previous reign. “Millions of struggling families and pensioners on middle and low incomes will wonder why the only tax rise or spending cut George Osborne is willing to reconsider is the top rate of tax for the very richest,” Balls said.