THE PRIME MINISTER is considering raising the threshold for the 40% tax band, claiming to “understand” the problem of it kicking in “when people are not earning a lot of money”.
In a speech made to workers at a water company in Warrington, he said people “who don’t see themselves as fundamentally wealthy” are paying the 40p rate, which applies to those earning £41,865 or more per year.
Despite claiming he “understood” the problem, Cameron insisted he could not make any promises, the Guardian reports.
The most recent official annual figures showed the average salary for men in full time employment was £29,300, while it was £23,600 for women, according to the Office for National Statistics.
More than two million extra people will start paying the higher rate of tax over the course of the parliament, according to the Institute of Fiscal Studies – a process known fiscal drag, because the rate does not rise, but salaries rise with wage inflation.
Cameron said: “I understand the problem with the 40p rate kicking in when people are not earning a lot of money, and I have to look very carefully at the books before I can make any promises about it.”
Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation has tightened regulation of the US financial system
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