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7 September 2011
Last updated at 04:00 ET
Twenty leading economists have urged the government to drop the top 50p tax rate, which they say is doing "lasting damage" to the UK economy.
In a letter to the Financial Times, they say it should be axed "at the earliest opportunity" to boost growth.
It comes as Chancellor George Osborne says short-term economic forecasts for the UK have been revised down.
He has said the 50p rate on earnings over £150,000 - introduced by Labour - is only a temporary measure.
The 20 signatories include two former members of the Bank of England's Monetary Policy Committee (MPC), DeAnne Julius and Sushil Wadhwani and are part of a campaign being promoted through a PR firm.
The 20 economists say around 320,000 taxpayers pay the highest rate of tax, 1% of the total number.
They state that the UK has "one of the highest personal tax regimes in the industrialised world, making it less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers".
Continue reading the main story Analysis
Talk to those around George Osborne and there's precious little enthusiasm for the 50p top rate of tax.
The question is not so much whether to get rid of it but how to get rid of it.
The problem is not just selling such a policy to the electorate - remember all that rhetoric about those with the broadest shoulders bearing the heaviest burden - but also squaring such a move with the Lib Dems.
The hope is that the review being carried out by Revenue and Customs into the 50p rate will conclude early next year that far from raising revenue, the 50p rate may actually cost the Treasury money.
Why? Because it deters international investors from coming here and encourages other wealthy individuals to leave Britain.
Then, the expectation is this could provide Mr Osborne with the necessary political cover to scrap the tax well before the next election.
The letter, whose signatories also include Professor Danny Quah from the London School of Economics and the veteran monetarist Professor Patrick Minford of Cardiff University, calls on the coalition, "to drop the 50p tax at the earliest opportunity as part of a package of measures to stimulate growth". It was organised by Bridget Rosewell, chairwoman of Volterra Consulting.
Ms Julius told BBC Radio 4's Today programme that many hedge funds had already moved to Switzerland and that "historically" if marginal rates were raised on "a small number of highly mobile people you end up not collecting the tax that you'd hoped to".
The points outlined in the letter, that higher tax rates punish wealth creators and could make people settle elsewhere, echo those made when tougher taxes were introduced for so-called non-doms, individuals who spend a lot of time in the UK but are not resident for tax purposes.
In a speech on Tuesday, Chancellor George Osborne said recent economic data had led to short term forecasts being revised down - but pledged to stick to his budget deficit-cutting plans.
"While we have all had to revise down our short-term expectations over recent weeks, the only people who should be fundamentally re-examining their view of the world are those who thought that this time was different."
The previous Labour government introduced the 50p tax rate on high earners, intended as an emergency measure to tackle the deficit, in former chancellor Alistair Darling's final budget in 2010.
His successor, Mr Osborne, decided to keep it in his first two budgets but always said it was a temporary measure. In March he said: "I've said before that now wouldn't be the right time to remove it, when we're asking others in our society on much lower incomes to make sacrifices."
He also said in the past that it "would do lasting damage to our economy if it were to become permanent".
Mr Osborne has asked HMRC to review how much money is being brought in from the 50p band, something that it will not be able to complete until after the deadline for this tax year's self-assessment forms in January 2012.
In response to the FT letter, a Treasury spokesman said: "The government is committed to a competitive tax system, but in reducing the deficit, we have always been clear that those with the broadest shoulders should carry the greatest burden."
BBC political editor Nick Robinson said the FT letter echoed the views of the business lobbying organisation the CBI, and various Conservative backbenchers.
He said Mr Osborne wants to axe the 50p rate - but the argument was as much about political symbolism - the argument that the rich should pay more - as it was about the economy.
He would also have to square the decision with the Conservatives' coalition partners - the Liberal Democrats. Lib Dem Chief Secretary to the Treasury Danny Alexander told the BBC in July that anybody who believed abolishing the 50p tax rate was a priority was in "cloud cuckoo land".
And former Labour chancellor Mr Darling told the BBC the 50p rate must "stay in place until we get through this crisis".
"It would be grossly unfair to remove it . If they don't pay their tax the it's the poorer people, the people of low incomes who are going to pay."
Elsewhere in the world, wealthy individuals including France's richest woman Liliane Bettencourt and the US billionaire investor Warren Buffet have both said they would be happy to pay higher taxes.
A statement from shadow chancellor Ed Balls' office said a better way of boosting the economy would be to cut the VAT rate from its current 20%.
"Labour has said that temporarily reversing the government's VAT rise - which we believe has helped to choke off the economic recovery - is the right priority for the moment."
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In a letter to the Financial Times, they say it should be axed "at the earliest opportunity" to boost growth.
It comes as Chancellor George Osborne says short-term economic forecasts for the UK have been revised down.
He has said the 50p rate on earnings over £150,000 - introduced by Labour - is only a temporary measure.
The 20 signatories include two former members of the Bank of England's Monetary Policy Committee (MPC), DeAnne Julius and Sushil Wadhwani and are part of a campaign being promoted through a PR firm.
The 20 economists say around 320,000 taxpayers pay the highest rate of tax, 1% of the total number.
They state that the UK has "one of the highest personal tax regimes in the industrialised world, making it less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers".
Continue reading the main story Analysis
Talk to those around George Osborne and there's precious little enthusiasm for the 50p top rate of tax.
The question is not so much whether to get rid of it but how to get rid of it.
The problem is not just selling such a policy to the electorate - remember all that rhetoric about those with the broadest shoulders bearing the heaviest burden - but also squaring such a move with the Lib Dems.
The hope is that the review being carried out by Revenue and Customs into the 50p rate will conclude early next year that far from raising revenue, the 50p rate may actually cost the Treasury money.
Why? Because it deters international investors from coming here and encourages other wealthy individuals to leave Britain.
Then, the expectation is this could provide Mr Osborne with the necessary political cover to scrap the tax well before the next election.
The letter, whose signatories also include Professor Danny Quah from the London School of Economics and the veteran monetarist Professor Patrick Minford of Cardiff University, calls on the coalition, "to drop the 50p tax at the earliest opportunity as part of a package of measures to stimulate growth". It was organised by Bridget Rosewell, chairwoman of Volterra Consulting.
Ms Julius told BBC Radio 4's Today programme that many hedge funds had already moved to Switzerland and that "historically" if marginal rates were raised on "a small number of highly mobile people you end up not collecting the tax that you'd hoped to".
The points outlined in the letter, that higher tax rates punish wealth creators and could make people settle elsewhere, echo those made when tougher taxes were introduced for so-called non-doms, individuals who spend a lot of time in the UK but are not resident for tax purposes.
In a speech on Tuesday, Chancellor George Osborne said recent economic data had led to short term forecasts being revised down - but pledged to stick to his budget deficit-cutting plans.
"While we have all had to revise down our short-term expectations over recent weeks, the only people who should be fundamentally re-examining their view of the world are those who thought that this time was different."
The previous Labour government introduced the 50p tax rate on high earners, intended as an emergency measure to tackle the deficit, in former chancellor Alistair Darling's final budget in 2010.
His successor, Mr Osborne, decided to keep it in his first two budgets but always said it was a temporary measure. In March he said: "I've said before that now wouldn't be the right time to remove it, when we're asking others in our society on much lower incomes to make sacrifices."
He also said in the past that it "would do lasting damage to our economy if it were to become permanent".
Mr Osborne has asked HMRC to review how much money is being brought in from the 50p band, something that it will not be able to complete until after the deadline for this tax year's self-assessment forms in January 2012.
In response to the FT letter, a Treasury spokesman said: "The government is committed to a competitive tax system, but in reducing the deficit, we have always been clear that those with the broadest shoulders should carry the greatest burden."
BBC political editor Nick Robinson said the FT letter echoed the views of the business lobbying organisation the CBI, and various Conservative backbenchers.
He said Mr Osborne wants to axe the 50p rate - but the argument was as much about political symbolism - the argument that the rich should pay more - as it was about the economy.
He would also have to square the decision with the Conservatives' coalition partners - the Liberal Democrats. Lib Dem Chief Secretary to the Treasury Danny Alexander told the BBC in July that anybody who believed abolishing the 50p tax rate was a priority was in "cloud cuckoo land".
And former Labour chancellor Mr Darling told the BBC the 50p rate must "stay in place until we get through this crisis".
"It would be grossly unfair to remove it . If they don't pay their tax the it's the poorer people, the people of low incomes who are going to pay."
Elsewhere in the world, wealthy individuals including France's richest woman Liliane Bettencourt and the US billionaire investor Warren Buffet have both said they would be happy to pay higher taxes.
A statement from shadow chancellor Ed Balls' office said a better way of boosting the economy would be to cut the VAT rate from its current 20%.
"Labour has said that temporarily reversing the government's VAT rise - which we believe has helped to choke off the economic recovery - is the right priority for the moment."
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