Treasury to lose millions as City minister admits high earners will dodge 50p tax rate
By James Chapman
Doubts over Labour's new 50p top rate of tax mounted today as a Treasury minister suggested the amount of money expected to be raked in had been 'significantly reduced'.
City Minister Lord Myners conceded 'behavioural changes' - the wealthy leaving Britain or simply finding ways to dodge the new tax - meant the Government had scaled down the anticipated revenue.
He also insisted the Government aimed to reduce the 50p rate on earnings of 150,000 or more 'as soon as it makes sense to do so'.
Dodge: Lord Myners said 'behavioural changes' meant the Government had scaled down the anticipated revenue. 'The broadest shoulders must quite rightly bear the greatest burden,' he said.
'We're talking about the top less than two per cent of the population by income, a section which has enjoyed an increase in earnings more than double the median over the last 10 years.
'It is not a commitment of ideology. We would wish to see a reduction in the top rate of tax as soon as it makes sense to do so.'
Lord Myners' admission came as it was reported the Treasury had drawn up detailed plans for spending cuts based on an analysis of countries which have successfully tackled budget deficits.
A leaked internal document showed there was 'broad agreement' in the Treasury that 'spending restraint is more likely to generate better economic performance than tax increases'.
Previously, ministers have suggested the 50p tax rate, which comes into force in April, will remain in place throughout the four or five years of the next Parliament.
Former Tory minister Lord Hamilton said that if many taxpayers moved abroad, the overall tax take could actually drop overall rather than increase.
Lord Myners insisted 'very small' numbers of people appear to be leaving Britain as a result of the new tax.
He added: 'We have made adjustments for the behavioural consequences of the new higher rate of taxation and have accordingly significantly reduced the anticipated tax take. But we still believe it will be beneficial.'
A Treasury spokesman insisted the minister had been talking about the original calculations that were made when the tax was announced, rather than any new assessment.
The Treasury forecast that the tax would rake in 1.13bn in its first year.
However, the spokesman declined to say whether the anticipated tax take might be altered in the forthcoming Budget.
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