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Business Heads Urge UK To Cut Tax

by Robert Lee,, London

14 November 2011

While simple solutions do not exist for stimulating growth in the UK's economy, measures including the scrapping of the 50p% rate of tax would have a disproportionately positive impact, a group of prominent business leaders has said.

In an open letter to Chancellor George Osborne published in The Daily Telegraph, thirty leading businessmen have urged the government to consider the key changes of emphasis they believe are vital to future economic strategy.

Three recommendations are made: the government should commit to increasing investment in infrastructure; it should implement an adjustment of personal taxes to increase demand and encourage wealth creators, and it should stand firm on simplifying regulatory processes and resisting burdensome additional regulation from the European Union.

Unsurprisingly, the 50% top rate of personal income tax, levied on all incomes over GBP150,000 (USD238,842), is targeted in the letter, with the signatories emphasizing the need to restore the 40% levy as the highest rate.

The letter states: "An early removal of the temporary 50% rate would attract wealth generators to the United Kingdom and support the entrepreneurs we need to help us grow the economy and provide jobs. We await the conclusions of the HMRC evaluation of the sums raised by the 50%; however, we are confident that the cost to the Treasury, if any, in the short term will not be material and that the advantages over the life of this Parliament in terms of generally increased economic activity will more than outweigh any direct costs. These changes to tax policy are equitable and would boost demand and confidence at a modest short-term cost to the Exchequer."

In addition, the letter suggests an acceleration of the government's commitment to increasing the personal income tax allowance. The allowance is set to rise by GBP630 to GBP8,105 in April, 2012, at an estimated cost to the Treasury of GBP1bn. The signatories would like to see an increase of at least GBP1,000. "Raising the personal allowance will boost the disposable income of those households who spend a high proportion of their discretionary income and thus boost aggregate demand", the letter says.

Among the signatories to the letter are: Sir Nigel Rudd, Chairman, BAA Airports; Chris Griggs, Chief Executive, British Land; Francis Salway, Chief Executive, Land Securities; Ian Powell, Chairman and Senior Partner, PricewaterhouseCoopers; Harvey McGrath, Chairman, Prudential; and Ian McAlpine, Senior Partner, Sir Robert McAlpine.

Osborne is due to release his autumn statement on the state of the UK economy on November 29. He will issue it alongside the Office of Budget Responsibility's publication of its economic and fiscal outlook.

TAGS: tax | investment | economics | business | tax incentives | fiscal policy | entrepreneurs | budget | United Kingdom | tax thresholds | tax reform | regulation | individual income tax

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