'Scrap the 50p tax rate', businesses tell Chancellor
More than 500 businesses have urged Chancellor George Osborne to cut the 50p top rate of tax in the forthcoming budget in order to help the UK economy.
In a letter sent to the Daily Telegraph, which was signed by 537 small and medium sized enterprises (SMEs), they said that the current 50p tax was 'reducing government income and damaging economic growth, public services and charitable giving.'
The letter attacked the higher rate of tax - labelling it a 58p tax after national insurance was taken into account - saying it left 'wealth creators' in a 'very awkward position'.
It added: "We believe the richest should help the poorest in society. One per cent of taxpayers are already responsible for 24 per cent of income taxes. But penalising high earners through an unfair, politically motivated tax puts populist politics before sound economics."
The tax rate of 50p in the pound currently affects those earning over £150,000 a year. Business leaders also wrote to the Chancellor last September in which a group of economists warned that the tax rate would cause lasting 'damage to the UK economy.'
Speaking to Sky News earlier in the year, Prime Minister David Cameron said the rate - originally implemented by the last Labour government - was a temporary measure, although he admitted the Government was waiting on HMRC to asses latest tax returns to establish how effective it has been.
There is speculation that it may be another three years before it is axed.
Rachel Reeves, shadow chief secretary to the Treasury, acknowledged the concerns of business owners but said that now was not the time to cut the tax rate.
"When millions of families and pensioners on middle and low incomes are being squeezed by the VAT rise and cuts to tax credits, cutting taxes only for the richest 1% cannot be the right priority now," she said.
Labour is calling on the chancellor to use the almost £1bn unspent from his failed national insurance holiday to give a tax break to all small firms taking on extra workers."