A lesson provided by Great Britain:
Two-thirds of millionaires left Britain to avoid 50p tax rate
Almost two-thirds of the country’s million-pound earners disappeared from
Britain after the introduction of the 50p top rate of tax, figures have
disclosed.
In the 2009-10 tax year, more than 16,000 people declared an annual income of
more than £1 million to HM Revenue and Customs.
This number fell to just 6,000 after Gordon Brown introduced the new 50p top
rate of income tax shortly before the last general election.
The figures have been seized upon by the Conservatives to claim that
increasing the highest rate of tax actually led to a loss in revenues for the
Government.
It is believed that rich Britons moved abroad or took steps to avoid paying
the new levy by reducing their taxable incomes.
George Osborne, the Chancellor, announced in the Budget earlier this year
that the 50p top rate will be reduced to 45p from next April.
Last night, Harriet Baldwin, the Conservative MP who uncovered the latest
figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.
Far from raising funds, it actually cost the UK £7 billion in lost tax
revenue.
“Labour now needs to admit that their policies resulted in millionaires
paying less tax and come clean about whether they would reintroduce this failed
policy if they were in power.”
Mr Osborne argued earlier this year that the 50p rate was deterring
entrepreneurs from coming to Britain.
The Chancellor wanted to scrap the top rate altogether for those earning more
than £150,000 a year – and return to the previous system of a basic and top rate
of tax.
This was blocked by the Liberal Democrats without a new mansion tax being
introduced.
Labour will hold a parliamentary debate today to criticise the decision to
reduce the top rate, which Ed Miliband, the Labour leader, has described as a
“tax cut for millionaires”.
Senior Coalition figures are locked in negotiations over next Wednesday’s
Autumn Statement which will set out government tax policies for next year.
The Tories wish to freeze out-of-work benefits. The handouts usually rise in
line with inflation, which has meant that the unemployed are likely to receive a
higher rise than most workers can expect.
It is understood that the Lib Dems will only allow the benefits freeze if
taxes on the rich are increased.
The Lib Dems have long cherished an increase in taxes for multi-million pound
properties. David Cameron has ruled out changes to council tax.
