The Staggers

The New Statesman’s rolling politics blog

Danny Alexander rules out cut to 50p tax rate

The Lib Dem minister says government is not going to "shift our priority to reducing the tax burden

By Samira Shackle Published 31 July 2011 12:30

Danny Alexander has said that the government does not want to reduce the top tax rate, saying that anyone advocating a cut in the 50p tax rate was "living in cloud cuckoo land".

This follows calls by Boris Johnson and the former chancellor, Norman Lamont, to scrap the rate. Lamont said yesterday that taxes needed to be cut to make Britain as competitive as other European countries.

Speaking on the Andrew Marr Show this morning, Alexander was unequivocal:

We set out in the Coalition agreement, and it's something that we as Liberal Democrats pushed very hard for, that the Government's first priority in tax reductions would be tax cuts for people on low and middle incomes. Those very families who are working hard to try and make ends meet. Anyone who thinks we're going to shift our priority to reducing the tax burden for the wealthiest has got another think coming.

It's another clear statement of Lib Dem identity by a senior minister, and will draw ire from elements of the Tory backbench, who oppose the high rate. It also marks a departure from George Osborne's line, which has always been that the 50p rate is a temporary measure. The Chancellor said in the Budget earlier this year that high personal tax rates "crush enterprise, undermine aspiration and often undermine tax revenues as people avoid them", but refused to be drawn on when the 50p rate would be brought down.

Osborne is instinctively a low tax Conservative, and if his hands were not tied by the deficit reduction programme, it is likely he would have brought the rate down by now. It has been reported that the 50p rate could be scrapped in 2013, which would seem to go against Alexander's implication that it is being retained for ideological reasons. Either way, it is not going anywhere soon.

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Tags: Danny Alexander

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14 comments

Sun, 2011-07-31 23:53 — Lou (not verified)

Sorry swatantra but you have just made me roar with laughter with your Alexander appraisal and I really don't think you meant to.

You'll be telling me Justine Greening is the Chancellor of the Exchequer in waiting next!

Mon, 2011-08-08 12:55 — martybee (not verified)

Oh Dear...two words that make my heart sink..Danny Alexander

Mon, 2011-08-01 09:44 — john henry (not verified)

Danny Alexander is a Clown.I wouldn't be surprised if he defected to the Tories before the next General Election as he as so far shown how good he is at towing the Tory Line. So why not join the Party eh Danny?

Tue, 2011-08-02 20:26 — Freddie The Capitalist (not verified)

Lox - appreciate your thoughts, thanks! To be honest, I've worked with hundreds of people that have earned over £500k both around me and for me, so my observations aren't too hypothetical. I've seen first hand how these salaries are calculated and in most cases it's worryingly unrelated to performance. My assertion that people won't walk is also based on experience. Sadly, despite what I would have expected very few do. The reason is simple, right now there is nowhere else to go and plenty of people happy to take your place. I agree it's not for me to decide, it's the market that's speaking.

Mon, 2011-08-01 16:28 — Pat (not verified)

So when Osbourne ignores him and cuts the tax rate to 40% anyway, will he resign? Not likely.

Wed, 2011-08-03 08:04 — Luddite (not verified)

Lou: nobody hit the poorest in society more than Gordon Brown. Remember!!
All should pay for services received. The wealthiest should pay the most the poorest the least. But before anyone starts paying tax. Lets make sure them taxes are spent wisely and never squandered like the previous government did...

Mon, 2011-08-01 19:24 — Lox (not verified)

Freddie-hypothetically, if a future analysis of the effects of the 50% tax rate show that it's revenue neutral, would you still want to retain it? If a 75% tax rate decreased the tax take, would you want to keep it?

It's not really up to you to decide how much an employee's worth-unless that was based on your own experience of setting £500k as a maximum you'll pay anyone who works for you. I doubt that.

I agree with you in part-cut corporation tax, but then cut income tax, and bump up VAT as far as you need to. I'd like to have some more control over how much I give a state in whose competence or honesty I have no faith.

Mike Cobley, there's a point at which increasing tax rates results in decreasing tax revenues. Sorry, but it's a fact. Reagan cut US income tax rates and government income increased. You might not like it, but it's true. Of course, he then ran up a massive deficit playing nuclear poker with the USSR, but that's another story.

Wed, 2011-08-03 09:44 — Truthseeker (not verified)

Alexander is the just the poor sap they wheel out whenever bad news needs breaking ... Every time the Tory scum have hard hitting news to deliver, out he comes ... The Lib Dems deserve all they get for what they've done with that crowd ...

Sun, 2011-07-31 14:12 — Lou (not verified)

Trouble is the low and middle so called tax breaks aren't materialising to be exactly that, the VAT increase totally negates any tax break the government may have afforded people in that income bracket.

It hits the poorest 10% twice as much as the richest and the lowest earners (30%) are worse off

Sun, 2011-07-31 15:39 — Freddie The Capitalist (not verified)

Don't like the Liberals and can't see the point in Danny Alexander. Now that I've got that off my chest, he's right! The obscenely highly paid aren't going to vanish to Hong Kong or Switzerland. Bankers are facing massive headcount cuts globally - there's nowhere to run. Alexander's only partially right, the tax rate for those earning over £500,000 should be well over 75%. An employee simply doesn't justify such sums. Keep corporation tax down and shareholders (pension funds) will be fine. High time those footballers and tv presenters felt the pinch like the rest of the population.

http://t0startagain.blogspot.com/

Mon, 2011-08-01 23:27 — Eddy S (not verified)

The 50p tax is mostly symbolic, most of the tax is easily avoided, even if it were raised to 90%, it would not increase any goverment revenue. The best taxes are the ones that are not easily avoided and those are not income one's on mobile and productive resources but on wealth such as land, a land tax would raise far more revenue than any income or company taxes - which companies such as virgin and google easily avoid through registering intellectual property and branding rights in subsidiaries in low tax countries.

Sun, 2011-07-31 17:32 — Hugh Markey (not verified)

Let's not underestimate titian-haired Danny Alexander! In the public domain, Danny ran a 'fun fair', no, not a faro fund, and we concede this must count for something.
George 'Turned Our Nice Again" Ozzie has always been an employee until someone handed him his cards.
George's light-hearted remarks - "Eeh!, well I'll go to our house!", or perhaps, "Mother!" baffles us.
But of course George is one of the few in Cameron's Old School Tie Cabinet who did not attend Eton College. Tiresome, we know. George is now in Hollywood. Probably auditioning for a remake of the Cary Grant movie- 'The Awful Truth!'

Danny's a promoter! 'Yes, this watch is pure gold, mate!
100% guarantee!"

Crap Game

Sun, 2011-07-31 19:44 — mike cobley (not verified)

C'mon, let's get real - tax on high earners should be at least 65% since after all we are in the middle of a deficit crisis of Krakatoa-like proportions....Yeah, seriously, raise taxes to 65% for the high earners and that along with REALLY going to work on tax fraud would cut the deficit down to a 2.5 on the Richter scale. That is what the government would do, if it was serious about it.

Sun, 2011-07-31 23:37 — swatantra

Danny Alexander is surprising oucome of this Coalition. who would have thought that a litle known Scot of very little actual experience could have so much influence and power behind the Throne. Its Danny thats holding the whole Coalition together, not Nick. Remove Danny and you brng the Coalition down.
keep the tax and squeeze their pips.