Jeremy Warner has added his voice to the campaign to abolish the 50p top rate of income tax. In a thoughtful article in yesterday’s Daily Telegraph, Mr Warner reaffirmed the growing consensus that far from raising any revenue for the Treasury, the 50p rate raises so little, if indeed it raises anything, that abolition would be unlikely to harm revenues.
“There isn't much the UK can do about the stupidities of European policymakers, yet there are still things that can and indeed must be done to help ourselves. Targeted tax cuts are proven to incentivise enterprise, investment and growth, and there are at least two that could be enacted immediately in a manner unlikely to harm revenues.
"One would be to reverse the 50pc higher tax rate. A second would be to reintroduce 10pc taper relief for capital gains. It is logically absurd to have a tax system which is less favourable to top earners and business investment now when such tax breaks are really needed than it was during the boom, when arguably they weren't. The motivation for imposing these higher rates was entirely political, and both are now almost certainly costing more money than they raise.”
Hippocrates may not have actually said “first, do no harm” in his famous oath for doctors, but there’s certainly a good case for requiring Chancellors of the Exchequer to swear something along those lines before they can be allowed to get their hands on the keys to Number 11. But while this principle should apply whatever the economic circumstances, it is especially relevant now. The British economy is in the doldrums, weakened by taxes that are too high and too complex and asphyxiated by over-zealous regulation and red tape. The national finances are in a perilous state, with only the wafer-thin credibility of the Coalition Government’s austerity plan saving them from the fate of Ireland, Greece and Italy. We simply can’t afford expensive political gimmicks.
Jeremy Warner made the point that the inevitable puerile spin from abolishing the 50p top rate of tax must not deflect the Government from doing the right thing:
"In today's febrile and hopelessly compromised political environment, it would require real courage to carry out a programme that would inevitably be dubbed tax breaks for the rich, yet without radical incentives for wealth and job creation, it's hard to be optimistic for the future of our economy.”
Now must be the time to meet the political challenge for the national economic interest. The Government must no longer defend the indefensible: a tax that cannot even fulfil its primary objective of raising revenue. Abolish the 50p rate of income tax, Mr Osborne.