Former Conservative Chancellors Lord Nigel Lawson and Lord Norman Lamont are calling for tax cuts on middle earners ahead of next week’s Budget.
Lord Lawson, who was Chancellor from 1983 to 1989, cut the top rate of tax from 60p to 40p in his 1988 Budget. The 40p rate currently kicks in at £42,150 but some are calling for the level to be raised.
Lawson says: “Far too many people are paying the 40 per cent rate. The total should be much closer to the number when I was Chancellor.
“It was intended for the rich, the well-off. The people who are paying it today are middling professionals who should not be in the higher rate.
He added: “If you earn £45,000, you are neither rich nor poor – you are in the middle. You are certainly not rich. No one on £45,000 should be paying a marginal rate of 40 per cent tax.”
Lawson also suggested cutting basic rate income tax to from 20p to 19p instead of raising the personal allowance to £10,500 next year, which is widely tipped.
Lord Lamont, who was Chancellor from 1990 to 1993, said: “I think there ought to be a rise in the threshold of the 40 per cent, maybe to £44,000 or something like that as a first step.
“Long-run, you can’t go on and on not increasing this commensurate with earnings because you will end up with a situation where the 40 per cent becomes the basic rate. That is complete nonsense.”
Chancellor George Osborne is coming under growing pressure from Conservative backbenchers to cut taxes on people earning between £40,000 and £50,000 a year.
By raising the personal allowance to £10,000, which kicks in next month, Osborne has allowed more than 1.4 million extra taxpayers to drift into the higher rate tax band.
The influential Free Enterprise Group of 40 Conservative MPs wants the 40p band raised to £50,000.