Commenting on the Shadow Chancellor’s announcement that Labour would reintroduce the 50p top rate of income tax, Mark Littlewood, Director General at the Institute of Economic Affairs, said
“Reintroducing the 50p top rate of income tax would be a disaster for both enterprise and economic growth. As the UK’s economy finally begins to grow, it’s absurd that the Shadow Chancellor has announced a policy that would jeopardise the fragile recovery.
“Evidence has proven that a 50p rate raises trivial amounts of money and its long-term effects mean it may in fact raise no money at all. Those earning over £150,000 pay nearly 30% of all income tax and often create jobs so we should be nurturing, not eroding, this tax base. The Shadow Chancellor need only look across the Channel to France to see the damage punitive levels of income tax can reap on the wider economy.
“Ed Balls should be signalling that the UK is open for business. Instead, he has announced a policy that will disincentivise investment and job creation. Politicians should match their pro-business rhetoric by reducing the top rate further, rather than engaging in political posturing.”