Our opposites in BUCF have today signalled the call for an idea which has been floating around for a few years now. Scrapping the 50p tax rate for those earning over £150,000 a year. Now this is all very well, I think everyone can agree that governments ought to do their best to keep taxation as low as they can depending on the expenditure, but to say “Getting rid of the 50p tax is not a tax break for the rich, but a common sense policy to stimulate growth and encourage positivity in investment.” is something I’m going to have disagree with BUCF’s former-President.

Keeping interests rates low and cutting taxes for “entrepreneurs” may be all very well, but it counts for nothing if there’s no expenditure from the general population. This is what’s happening now, with the greatest squeeze on household finances for two years due to rising inflation, benefit cuts and of course the regressive rise in VAT (which heavily contributed to the rise in inflation), it is no wonder retail sales, construction and growth expectations are down.

Now of course, this post is completely leaving aside the fact that the 50% tax band will raise an additional £12.6 billion over five years according to Treasury figures . The real point of this post is why not cut VAT again instead? The IFS itself said that this was an effective stimulus for consumer spending (the real power of growth) when VAT was briefly cut to 15% in 2009.

And also, on a more simplistic note, to cut taxes for the rich, and yes millionaires as well, at a time when household incomes are being squeezed is nothing less than insulting for those struggling to pay the bills.

Max