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Is the 50% income tax rate here to stay?

Is the 50% income tax rate here to stay?

Leading lawyers said recently that the 50% income tax rate did not cause the exodus many people had predicted.

David Jervis, head of tax at Eversheds, the international law firm, said he was actually not that surprised. The 50% tax rate is referred to as a temporary measure and the Chancellor and other senior coalition members back this up.

The expectation that the top rate will not remain with us for long, plus the inconvenience incurred by taxpayers such as online accountants in relocating and London’s position as a world leading financial centre, could have helped to close the migration floodgates for the moment.

However, Danny Alexander, the chief secretary to the Treasury, has said that people seeking the abolition of the top tax rate are “living in cloud cuckoo land”.

Boris Johnson, the Mayor of London, and Lord Lamont, a former Chancellor of the Exchequer, recently called on the government to abolish the 50% tax rate.

The Lib Dem minister defended the government’s plan for economic recovery and said we had a long and difficult road to travel down. He went on to blame the global economy for the sluggish economic growth the UK is currently experiencing. Increased commodity prices and the soaring price of oil were major factors to blame for the dire state of the British economy, he said.

Alexander also claimed that when it comes to tax cuts, the coalition would prioritise reducing the burden on low and middle income people who are struggling to make ends meet.

Mr Alexander’s claims came after Norman Lamont said the lame excuses such as the Royal Wedding and the Japanese earthquake were to blame for sluggish growth were politically inspired.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Pollice Verso by Fuyoh!

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