More than 500 business leaders have called on Chancellor George Osborne to scrap the 50p top rate of tax in this month’s Budget.
A letter, signed by the owners of 537 small and medium-sized companies claims the tax reduces Government income and damages the economy.
Osborne has previously said the 50p rate is a temporary measure and asked officials to assess how much revenue it raises. The rate was introduced by Labour in 2009 to tax earnings of £150,000 or more.
The letter, sent to The Telegraph last week, 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. One 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.”
She 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.”