Introduction of the 45p rate represents a missed opportunity

Osborne should have introduced a 40p rate to create an incentive to work an invest in Britain

Commenting ahead of the reduction to the 50p rate of income tax, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“The introduction of the 45p top rate of income tax does not go far enough. Any tax cut is good for stimulating the economic growth we so badly need, but the Chancellor should have been braver and cut it to 40p when he had the opportunity. When the rate was cut from 60% to 40% in 1988, tax revenues soared because it created the incentive to work and invest in Britain. This is the kind of action we need now to boost our faltering economy.

“A considerable amount of those earning over £150,000 create jobs and as we try to reform welfare to make work pay, we should also be ensuring we are creating the right environment for job creators to flourish.”