Top UK economists urge their Chancellor to scrap 50p tax rate
Twenty of Britain's leading economists have urged the Chancellor George Osborne to scrap the 50p top rate of income tax – for the sake of the recovery.
The economists, including two former members of the Bank of England's policy committee, DeAnne Julius and Sushil Wadhwani, have signed a joint letter calling for George Osborne to drop the tax at the "earliest opportunity".
The letter to the Financial Times argues that the tax is "self-defeating" and "doing lasting damage to the UK economy". The economists argue: "Only by returning to an internationally competitive tax regime will Britain enjoy long-term sustainable economic growth."
They say that Britain has "one of the highest personal tax regimes in the industrialised world, making it less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers".
Since 1997 Britain has dropped from 4th position to 95th in the World Economic Forum's low tax rankings. The 50p tax on earnings of more than £150,000, which was introduced by Labour, hits around 320,000 people, or 1pc of taxpayers, according to HM Revenue & Customs . It was intended to raise £2.7bn a year.
The Coalition has insisted that the tax had to stay while the country's finances were rebuilt. However, at the Budget in March Mr Osborne said the tax would inflict "lasting damage" on the economy if it became permanent. He has described the tax as "uncompetitive" and "economically inefficient." Leading Tories including Eric Pickles and Boris Johnson have argued that Britain would benefit if the tax were removed.
The Chancellor has ordered an investigation into how much the tax brings into the national coffers. HMRC has been told to report back by January.
Scrapping the tax would face intense opposition, both inside and outside the Government.