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Business lobby attacks Labour plans to bring back 50% tax rate

Shadow chancellor Ed Balls has rejected claims that Labour is “anti-business” after announcing plans to increase the highest rate of tax back up to 50 per cent. 

Balls says the move by the coalition Government to reduce the highest income tax bracket from 50 per cent – as set by the previous Labour Government in 2010 – to 45 per cent last April for those earning over £150,000 was “foolish” and had led to public resentment.

He says the re-imposed rate would remain in place only until the national deficit had been cleared, with an aim of achieving this goal by 2020.

Speaking to the BBC, London Stock Exchange Group chief executive Xavier Rolet says: “I think fiscal policy sends a powerful message and has a powerful impact on investment decisions,” believing the move could make the UK a less attractive workplace for high-income earners.

Former trade minister Lord Jones says the approach being adopted by Labour appears to be “if it creates wealth, let’s kick it.”

Former Marks & Spencer chief executive Stuart Rose says the reintroduction of a 50 per cent rate “borders on predatory taxation”.

On the BBC’s Andrew Marr show, Balls said: “What we are talking about is going to 50 per cent while we get the deficit down.

“The phrase is ‘we are all in it together’ – that is part of the policy.”

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. There are millions of ‘wealth creators’ earning far less than £150K who have been ‘kicked’ at one time or another over the last couple of years.

  2. “He says the re-imposed rate would remain in place only until the national deficit had been cleared”

    The deficit? That’s the annually occurring situation where the government spends more than it receives in revenue? So by Mr. Balls rationale in 2020 the 50% tax rate is in fact responsible for a surplus and thus eliminating it will result in a balanced budget due to falling tax revenues.

    If that’s the case why would any rational chancellor cut a tax that results in increased revenues unless you understand that it distorts economic activity and thus harms growth. If that’s not the case then why introduce it at all?

    Something tells me that logic and economic reality are secondary to political expedience.

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