Business: Law Warns 50p Tax Will Hurt Economy

Laws urges coalition to make 50p tax temporary

Laws urges coalition to make 50p tax temporary

Wednesday saw Liberal Democrat and former Treasury ministery David Laws make a statement against the 50p rate of income tax.

Laws warned against its permanence, saying that keeping it in place will scare off businesses and entrepreneurs from locating their business headquarters in the UK.

Keep it “temporary”

Laws said that it would be “extraordinary” to end the policy soon, but still insisted that the 50% rate of tax for earnings over £150,000 must be temporary in order to keep the UK at the forefront of the financial world.

Laws said of the potential damage from the tax: “There is a risk not only that some people might decide to resite overseas, but particularly that where firms and leadership teams face a choice of coming to the UK or some other business centre, that they might not opt for the UK.”

He continued, saying that businesses may not choose against the UK if it is made known that the coalition feels the 50p should be temporary.

The tax was introduced by Labour’s formal chancellor, Alistair Darling.

Mr. Laws also warned his Liberal Democrat colleagues against attacking or getting into disputes with their Conservative partners in the coalition, saying that that behaviour makes negotiations on policy more difficult.

Lib Dem resistance

Liberal Democrat leader Nick Clegg, however, resists the bid backed by Chancellor Osborne to scrap the top tax rate.

In statements earlier this week, Clegg said that the Liberal Democrats would agree to abolish the tax over the long run, but only if they were replaced by other levies on unearned income. Options include a “mansion tax” on extraordinarily valuable homes.

Though David Laws is in favour of scrapping the tax, he noted that doing so too soon would risk losing publis support, saying “The priority is to deliver tax reductions for people on low and middle incomes.”

Laws’s speech in favor of the Conservative stance of scrapping the 50p tax directly contrasts with moves that other major Lib Dems took this week. Senior members such as Vince Cable and Chris Huhne have made speeches that clearly projected ideology distancing themselves from Conservatives.

In light of this, Laws spoke of the importance that his party not be “oppositionist.”

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