More than 500 business leaders have called on Chancellor George Osborne to scrap the 50p top rate of tax in next month’s Budget.
The letter, signed by the owners of 537 small and medium-sized businesses, accuses Osborne of “populist politics before sound economics” and claimed the move was reducing Government income and damaging the economy.
Osborne has previously said the 50p tax rate was a temporary measure and has asked officials to assess how much revenue it raises. The rate was introduced by Labour to tax those earning £150,000 or more.
The letter, sent to The Telegraph, says: “Given the current state of the UK economy, we urge the chancellor to urgently consider scrapping the top rate of tax in his forthcoming Budget.
“The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.
“We believe the richest should help the poorest in society. 1 per cent of taxpayers are forecast to contribute nearly 28 per cent of income taxes.
“But penalising high earners through an unfair, politically-motivated tax puts populist politics before sound economics.”
However, Shadow chief secretary Rachel Reeves warns against getting rid of the 50p rate.
According to the BBC, Reeves says: “When millions of families and pensioners on middle and low incomes are being squeezed by the VAT rise and cuts to tax credits, cutting taxes only for the richest 1 per cent cannot be the right priority now,” she said.
“But these business owners are right to call on the government to take action to stimulate growth and jobs in our economy.
“That’s why Labour is calling on the chancellor to use the almost £1bn unspent from his failed national insurance holiday to give a tax break to all small firms taking on extra workers.”