Treasury chief secretary Danny Alexander says those calling for the scrapping of the 50p income tax rate are “living in cloud cuckoo land”.
Alexander told the Financial Times the Government’s first priority should be to help those on low and middle incomes, with measures including increasing the lowest income tax threshold to £10,000.
The comments expose a rift within Cabinet as Chancellor George Osborne has signalled his intent to look at scrapping the highest marginal rate of tax.
The temporary 50 per cent tax rate affects those earning more than £150,000 per year and the Treasury is currently undertaking work on how much extra revenue is raised through the tax.
The Mayor of London Boris Johnson is calling for the 50p rate to be removed to stimulate the economy through motivating entrepreneurs.
The coalition is thought to agree that any change to the temporary tax rate should not take place until after 2013.