Think tank warns tax system 'punishing success'
06 Feb 2014
The Institute for Fiscal Studies (IFS) this week warned that reliance on tax from higher earners is a financial risk for the nation.
‘Lumping more taxes on the rich,’ is not sustainable, the IFS suggested. Figures show that the 300,000 people earning more than the top income tax threshold of £150,000 contribute nearly 30% of income tax revenue.
Concerns have been raised over reliance on such a small group of higher earners, because they may see a decline in business or even choose to leave the UK. Senior economist at the IFS, Rowena Crawford, said, ‘the world is more mobile than it used to be’.
Despite these concerns, the Labour party recently promised to raise the top rate of income tax to 50%, should it win the next general election.
Liberal Democrat Chief Secretary to the Treasury, Danny Alexander, said the top rate would be brought down to 40% ‘over my dead body’ – in response to Conservative party pressure to lower the rate to its pre-financial crisis level.