Osborne rejects pleas to scrap 50 per cent income tax

George Osborne has rejected calls from MPs to scrap the 50p top tax rate in the Budget later this month.

The Chancellor, backed by Prime Minister David Cameron, told Tories the time was not right in the lead up to cuts and pay freeze in the public sector.

The higher tax rate has been criticised for making the UK less attractive to rich people who will create jobs but is expected to stay as long as the public sector pay freeze, which runs until 2012-2013.

Labour estimated that the top rate would raise £3bn by 2011/2012 but the Treasury is not sure of a net yield because rich people take measures to avoid the higher tax rate.