David Cameron is expected to abandon his plans to abolish the 50p tax rate until at least 2015.
Despite pressure from business leaders and other interested parties the coalition have apparently concluded that cutting the tax in the near future is impossible, as they will be seen as pandering to the wealthy whilst continuing with widespread austerity measures.
A report on the proceeds of the tax due to be published by HMRC in the near future is expected to show a surge in revenues worth hundreds of millions of pounds from the first year the tax was introduced – which would further undermine the cause for scrapping it.
Speaking to the Telegraph, a senior Government source said last night “This is not something we plan to move on any time soon, we are constantly emphasising the need for those with the broadest shoulders to do more, so we can hardly turn around and start cutting their taxes first.”
Business leaders and Tory back benchers have repeatedly claimed that the tax is damaging the UK’s economy by driving wealthy entrepreneurs abroad. Aside from the revenue created by it the main argument for keeping the tax is that it would be an insult to those affected by the public sector pay freeze, treasury officials yesterday gave a reminder of George Osborne’s 2009 speech where he warned that cutting the tax would by ‘grossly unfair’ while public sector pay was still frozen..