THE 50p TOP rate of tax will raise an additional £12.6bn over five years, according to the Treasury's own figures.
By 2015/16, the tax rate on people earning above £150,000 a year will bring in a projected £3.2bn a year more than if the rate stayed at 40%. In all, the rate will have raised at additional £12.6bn over the five years since it was introduced. The figures also show that it will raise an additional £5.3bn compared with a 45% rate.
The figures were calculated in November 2010 and were revealed following a parliamentary question by Lord Ashcroft.
Chancellor George Osborne (pictured) has previously claimed that the tax rate was a temporary measure. However, he has indicated a final decision will be made following a review by HM Revenue & Customs to be completed after the self-assessment deadline in January 2012.
A letter to the Financial Times from 20 leading economists, published yesterday, called on the government to scrap the top rate of tax, claiming it was harming economic growth.
We keep hearing about these predictions and figures, do we ever hear about how they are arrived at? What about when they are wrong, who gets the blame? If I were to say, no, you figures are wrong, I estimate that the 50p rate will lose £5 billion in the next five years, who would be able to contradict me? Exactly! Its all sound and fury, signifying nothing! Its just people making up hypotheses based on assumptions that tell you nothing about the real world. The real world is far too complicated for their models to be correct, but they give these figures because they know that nobody will ever remember them and furthermore nobody will ever condemn them for making a blatently silly prediction (if it is that).
Posted by: chris morris, 08 Sep 2011 | 11:30
if the 50p rate is going to raise 12bn + over the 5 year period, then perhaps, it should be increased to 60p for earnings over 500,000 and reduced to 45p for earnings between 150k and 250k. That way we would 'ALL be in it together' to quote Bro. Cameron!!
As for Chris' comment, projections are worked out mathematically, they are not 'best guesstimates', in short HMRC has an approx idea of how much people earn and can extrapolate figures from that information, in a mathematical way. As with all predictions they have a margin of error, normally +/- 1 or 2%. However if Cameron is as 'tough' as he reckons he is, why isn't he sorting out the 'unofficial deals' being done by a certain member of HMRC with companies such as Vodafone, or plugging the 'loopholes' on tax avoidance, that Commissar Osborne, has seen fit to make larger.
Posted by: Ray, 08 Sep 2011 | 15:05
I dont think these figures take into account the impact of highly talented people migrating to other parts of the world as a result of these changes. Loss of revenue as a result of these, i believe would be significant as well. No one wants to pay nearly half of their earnings away and get nothing (i really mean nothing) in return.
Posted by: Muhammad Nadeem, 08 Sep 2011 | 17:16
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