When the 50p tax band was introduced by Alistair Darling in April 2010 it was intended as a political statement as much as a tax-raising exercise. The message was that the country’s Finances are in a mess, it’s the fault of the global financial crisis and the bankers, so we will make sure that the rich pay in order to protect “hard-working” families. Never mind that the few who are fortunate enough to be in the 50p tax bracket are in-fact extremely hard-working and have, as a whole, contributed more to the country than most.
Regardless of its original intentions, the 50p tax rate is draining the country’s coffers. The marginal increase in the tax take is offset many times over by the loss of tax from workers who have left the country, workers who would otherwise have come here, and entrepreneurs that no longer put in the extra mile to generate wealth for themselves, for their workers, suppliers and partners.
I have personal experience. Working in London many of my friends and colleagues have chosen to work in Hong Kong, Singapore and Manila in the past 5 years. Not one of my friends who left chose to go for the improved lifestyle. Whatever else they may offer these countries are hot, humid and don’t offer the myriad cultural attractions of London. No, they left for more money and lower taxes.
Three to five years later these same people would normally be coming back to London, bringing with them their hard-work and high-paid jobs. But are they? Not a single one of my friends and colleagues who left has come back. They all site one thing. The punitive tax regime. While I wouldn’t suggest we try to compete with a 12% flat tax rate (wouldn’t that be nice), simply restoring 40% as the top rate would be enough to lure them, and countless others, back to the UK.
Now, in a letter to the FT, 20 leading economists have urged the government to drop the top 50p tax rate at the “earliest possible opportunity”, which they say is doing “lasting damage” to the UK economy.
The 20 signatories include two former members of the Bank of England’s Monetary Policy Committee (MPC), DeAnne Julius and Sushil Wadhwani and are part of a campaign being promoted through a PR firm.
They state that the UK has “one of the highest personal tax regimes in the industrialised world, making it less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers”.
The reality is that the 50p tax is a political tax, and is hugely damaging for the country. We stand for balancing the books. A tax that reduces tax revenue at the same time as penalising and discouraging hard-work is manifestly ridiculous. For that reason we encourage the country to support those that would abolish this tax.
Write to your MP. We simply can not afford to discourage hard work and entrepreneurs any longer, for the sake of appeasing misguided populist opinion.
Do you support the tax, or feel it should be removed. Please leave your comments below.