Cameron hints that cutting top tier tax rate may form part of Tory manifesto
Prime minister David Cameron has suggested that he would further reduce the top rate of tax to 40%. Last year, the Coalition Government reduced the rate of tax on incomes exceeding £150,000 from 50% to 45%.
Last week, the Prime Minister said cutting taxes for the middle classes would have to wait until the Government was running a budget surplus. He also hinted at long-lasting austerity in last month’s speech at the Lord Mayor’s banquet, “we need to do more with less. Not just now, but permanently”.
Today, however, Cameron told reporters “there’s a good list of things I have put in my little black book that I haven’t been able to do which will form the next Tory manifesto”. The implication was that one such policy was further tax breaks for the rich, as he reiterated “I’m a low tax Tory”.
However, the Office for National Statistics found earlier this year that the highest earners pay a smaller proportion of their incomes in taxes (combining direct and indirect taxes) than the lowest earners; the poorest fifth paid 36.6% of their incomes compared to 35.5% by the richest fifth.
Further tax breaks for the highest earners would be a politically controversial move, especially given that last week saw the publication of a damning report on poverty by the Joseph Rowntree Foundation (JRF), which found nearly 13 million people in the UK were living below the poverty line.
Most surprisingly, for the first time there were more working families living in poverty than there were workless and retired people. Julia Unwin, chief executive of the Joseph Rowntree Foundation, said: “While a recovery may be gathering momentum in the statistics and official forecasts, for those at the bottom, improving pay and prospects remain a mirage.”
Cameron’s Government have been slammed by Labour over the so-called cost of living crisis, with opposition leader Ed Miliband saying in a speech: “Since the late 1970s wages have grown almost twice as fast for the top 10% as they have for those in the middle. Our economy has become progressively less fair and the losers have been those on middle and low incomes.”