RATHER than improving the parlous state of Britain’s fiscal position, the new higher rate of tax will be bad for the public finances, the Institute for Directors (IoD) claimed in a report published yesterday.
The IoD argued that the 50p tax rate, which came into force yesterday, would raise little or no tax in the short term and would even lead to lower overall tax revenues in the medium to long term.
The group warned that the top rate would induce some high income individuals to move to more competitive tax jurisdictions. It would also tempt the directors of multinational groups to take their headquarters elsewhere, reducing the number of firms paying corporation tax.
The IoD said: “The creation of a 50p rate on income exacerbates the UK’s increasing lack of tax competitiveness and is likely to be a further deterrent to new international capital coming to the UK and to aspiration within.”