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Darling admits there’s ‘no science’ in his 50% tax rise

Chancellor Alistair Darling has admitted there is “no science” behind his decision to set the higher-rate tax threshold at 150,000.

Speaking at a Treasury select committee Budget inquiry last week, he said: “It was simply my judgement that I thought it was an appropriate figure.”

The Chancellor, quizzed over his decision to raise the highest rate of income tax to 50p, said he had been faced with “difficult choices” but felt this tax was the fairest way to raise revenues.

He said: “I reached the dec- ision because I thought it was the fairest way of ensuring that we did raise sufficient revenue. That decision was mine and I stand by it.”

Select committee member Graham Brady asked if Darling thought it was worth introducing a new tax which may only yield 31 per cent of the potential total income from the tax rise.

Darling said it was inevitable the Government would take a cautious view on to how much the new tax would raise and that, coupled with the scrapping of higher-rate pension tax relief, the measures would probably raise around 38 per cent of possible total income.

He said: “In relation to pension tax relief, if you were starting from here, you would not develop a system where a quarter of all the relief you give goes to 1 per cent of the top- earners. You have to ask yourself, OK, who is going to shoulder the burden? I don’t think it is unreasonable to say to people at the very top, some of whom have put remarkable amounts into their pension schemes one way or another, that they should have to make some contribution.”

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