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Higher Income Tax in Wales Should be Reduced Experts Say

Research by experts at the Cardiff Business School has come to the conclusion taxing high earners is not the best way forward.

In fact, the research went on to find that by reducing the current rate of higher income tax from 40% to 30% would actually bring in an additional £500 million a year,.

Why you might be wondering? Because it would attract more high earners into Wales from places such as England and Scotland many of the experts believe, which in turn brings in more revenue even at 30%.

This wouldn’t be immediate though, and the experts at Cardiff Business School predict for the first few years revenue would actually fall which is to be expected as people won’t move straight away.

However, by 10 years the research shows that the £500 million a year figure should be reached, which is some pretty decent income for the Welsh government.

The main concern I have is that most of the people in charge won’t be able to look past the fall in revenue over the first three years, so ultimately I say it might be difficult for this thing to get moving.

As the time of writing, the higher income tax bracket of 40% in Wales is paid on income between £43,001 and £150,000.

In my opinion, that 10% reduction would make a difference, and you could see umbrella contractors and professionals who earn five or six figures a year to definitely consider moving into Wales to save some money, especially the self employed who can work from home and don’t need to commute every day.

Not only that, but people in Wales that earn over £150,000 are currently taxed 45% on their income, but the report also suggests this could be reduced in order to attract the highest earners. When you have millionaires that begin to view Wales as a viable option, then it can be only good for the economy.

Will any of this be put into action though? When you consider it all has to go through UK parliament then I really don’t think so. Even if the report makes perfect sense and it would be a guaranteed £500 million a year for Wales, it would still be a challenge to get enough people to say yes.

As I mentioned earlier, the initial revenue would go down, and this is challenging for many people to understand, especially when they are politicians and not business people. Who knows though, maybe someone will understand the figures? Probably not but it might happen.

The report went on to suggest that reducing the 20% basic income tax rate would not have a beneficial effect for the Welsh economy, mainly because it wouldn’t attract any extra migration from other countries.

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