How does the Coalition Government score on the TPA's 2010 Manifesto?

January 05, 2015 3:55 PM

The General Election campaign has begun, so now is a good time to assess the Coalition Government’s performance against the TPA’s 2010 manifesto for taxpayers. We produced this in the run-up to the last Election and it contained targets for any incoming government for the first three months, the first year and the full five-year Parliament. We provided updates for the first two milestones here and here.

Manifesto_cover_image.pngThe Parliament has nearly run its course, so over the next month or so we’ll be scoring the Coalition Government out of five on each our manifesto items. We’ll assess one item a day here on the blog, and today we start with an item from our Tax and Spending proposals.

Scrap the 50p rate – 3/5

The Coalition Government reduced the 50p rate, but didn’t scrap it entirely. Instead, it was cut to 45p. That was welcome, but an opportunity was missed: it would have been far better to abolish the ‘additional’ rate of tax altogether, leaving the top rate of 40p as the actual top rate. Going half of the way from 50 to 40 didn't provide the benefit of simplification, with fewer rates.

Very few people would look at the tax system and think that those earning over £150,000 per year are the most deserving cause for a tax cut. It's hard to think of an example of someone who would be caught by it who wasn't pretty comfortably off. But it’s important to remember the wider economic picture instead of simply deciding that, at first glance, a policy hurts the rich and concluding it's not a problem because the rich can afford to pay. The problem with the 50p rate was that it simply didn't work, because it probably reduced tax revenues, leaving the rest of us to make up the shortfall, while killing jobs and slowing down the economic recovery in the meantime, leaving us all worse off. High rates like that don't just affect those who pay it. They affect everyone else, too.

See herehere and here for more details.

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