Former Bank of England policy makers Sushil Wadhwani and DeAnne Julius led calls for Prime Minister David Cameron to scrap Britain’s top 50 percent income-tax rate.
A letter signed by 20 economists in today’s Financial Times says the levy introduced by the previous Labour administration to help cut the budget deficit is hurting economic growth by discouraging entrepreneurs.
“We are concerned that Britain’s 50p income tax is doing lasting damage to the U.K. economy,” they wrote. “It gives the U.K. one of the highest personal tax regimes in the industrialized world, making it less competitive internationally and making us less attractive.”
Other signatories include Bob Rowthorn of the University of Cambridge, Danny Quah of the London School of Economics and Bridget Rosewell of Volterra Consulting.
Julius said the 50 percent rate risks leading to more firms such as hedge funds moving to other countries. “It’s something of a tipping point if you know that half the income you earn is going to be taken by the government,” she said in an interview with BBC television.
Most British voters are opposed to scrapping the 50 percent rate, which applies to annual incomes above 150,000 pounds ($240,000). A poll by ComRes Ltd. On Sept. 5 showed 57 percent want the levy to stay. Sixty-seven percent of Liberal Democrats, the junior partners in the coalition government, opposed abolishing the rate. ComRes surveyed 1,000 adults by phone Sept. 2-4.