The future of the 50 per cent tax rate is growing issue within the coalition. Unlike most government wrangles, this one doesn’t split
on partisan lines, with the yellows on one hand and the blues on the other. The debate is largely being forged by personalities. George
Osborne is well entrenched; Eric Pickles weighed-in for the race last weekend, saying that he wanted people “to
keep more money in their pockets”, indicating that he hopes the rate is temporary. (He went take a swipe at Vince Cable’s mansions tax, which he described as a “big mistake”.)
It’s David Willetts’ turn this weekend. The Times reports (£) that Willetts believes the tax must stay for the time being. Willetts said,
“It is very important that people see that when times are tough, we are, as they say, all in it together. That is an argument. People see that there are higher rates of tax being borne. That’s why we have kept it so far because if you are expecting sacrifices from people with modest earnings it’s right that can apply to high incomes as well.”
Willetts is making a political rather than an economic argument, which may anger those who believe that it is wrong to make political gestures with people’s hard won earnings. It’s a point that Nick Clegg understands. In an interview with the Journal, a local newspaper in the North East, earlier this week, he said:
“We can have a debate about 50p. I’m starting to think that there is no reason to think that the 50p has to remain there forever.”
If the Deputy Prime Minister has chosen this approach over a more populist stance, it suggests that George Osborne is edging the internal debate at present.
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