Leading think tank slams government's 50p tax

Date: 23rd June 2009

The Centre for Policy Studies (CPS) has labelled the government's 50p tax rate inefficient and unfair.

Four areas were highlighted in particular – fairness, simplicity, certainty and efficiency - in the report released yesterday (22nd July).

With the implementation of the tax, fairness was diminished, the report argued, as a result of 'widely variable' marginal rates that see certain higher earners on a lower rate of tax than some lower earners.

It argued the tax was not simple either, with 16 different tax rates.

Most significantly, it was suggested that the report was inefficient and unlikely to raise the revenue Alistair Darling MP expects.

Even if does, the report says, the revenue received (£2.4 billion) will have little effect on national borrowing figures which currently stand at £175 billion.

The report also argued that due to the economy future tax plans were shrouded in uncertainty.

Jill Kirkby, of CPS, said: "The Chancellor's Budget announcement of a 50p tax rate was a political manoeuvre to wrong foot the Conservatives.

"[Their] refusal to take the bait means that the economic and political case against 50p has not been made as strongly as it should have been."

She went on to say the government should "abolish [the tax] as quickly as possible."