Shadow Chancellor Ed Balls has questioned the independence of HM Revenue & Customs’ income tax rate review, describing it as “political”.
He said the review’s results, expected to be unveiled at Wednesday’s Budget alongside a cut in the top rate of tax, should have instead been carried out by the independent Office of Budget Responsibility.The review is expected to show the 50p rate brought in under £1bn in its first year.
Speaking on The Andrew Marr Show, Balls suggested Chancellor George Osborne had shied away from an OBR investigation because he might not like the results.
He said: “If George Osborne had the courage of his convictions, he would ask the independent Office of Budget Responsibility he set up to do that examination and he has not. It is a political report. It is not an independent report we are going to get on Wednesday.
“We said the top rate of tax would raise over a billion in the first year, two and a half in the second. Let’s see the numbers.George Osborne set up the OBR because he wanted “independence in my fiscal forecasts”. This is a fiscal forecast. Why did he not trust it to the OBR? Because it is a political issue.”
Speaking on the programme, Osborne defended the use of HMRC for the review. He said: “They are not a bad group of people to ask because they are the people who actually see the tax returns.”
On Labour’s position on the 50p rate, Balls said “no tax rate should be set in stone” but added “issues of fairness, priorities and public services” need to be considered.
In a compromise with the Lib Dems for a reduction in the top rate, Osborne is thought to be lining up new tax avoidance measures he will package as a “tycoon tax”. This falls short of Lib Dem leader Nick Clegg’s proposals at the party’s Spring conference of a minimum tax rate for the wealthy. The idea was introduced in the US after Warren Buffet said he paid proportionately less tax than his secretary.
Balls said: “The tycoon tax is a phrase, not a plan. You would have to look in real detail to see whether or not legally and tax wise you can make this work. You need to look at capital as well as income. It is very hard. It did not work in America.”