Darling Taxes Incomes Over 150,000 Pounds at 50% (Update2)
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By Mark Deen and Jennifer Ryan
April 22 (Bloomberg) -- Chancellor of the Exchequer Alistair Darling increased tax on Britain’s highest earners to 50 percent in an effort to contain a swelling budget deficit and play to the Labour Party’s traditional supporters.
The highest rate of income tax will kick in at 150,000 pounds ($218,000), Darling said today in his annual budget statement. The new rate, which compares with about 40 percent at present, will come into force next April.
The move, which comes as Labour trails the opposition Conservatives in opinion polls, reflects public anger at bankers with outsized pay packages. Darling, who predicted the largest budget deficit among the Group of 20 nations, also announced fresh support for the unemployed amid the worst recession since World War II.
These are “some of the first steps in creating fair tax system,” said Brendan Barber, general secretary of the Trades Union Congress. Britain’s unions are the biggest financial backers of the Labour Party.
The new rate is higher than the 45 percent planned in November and will come in a year earlier than the government originally expected. Darling also withdrew breaks for pension contributions for the highest tax bracket.
Darling’s View
“I am not proposing to increase taxes on income for this year,” he said in Parliament. The money will “help pay for additional support for people now.”
Voter anger with wealthy bankers soared earlier this year as Prime Minister Gordon Brown had to commit more public funds to shore up U.K. lenders. About 82 percent of Britons want bankers’ salaries capped and 85 percent support a limit on bonuses, polling by Populus Ltd. shows.
The pressure is such that the opposition Conservatives said they won’t make rescinding the new tax a priority if they win the next general election, which has to be held in June 2010 at the latest.
The changes also underline Darling’s need to rein in the U.K.’s budget deficit, which he said today will total 703 billion pounds during the five years through April 2014.
This year’s shortfall of 175 billion pounds, or 12.4 percent of gross domestic product, exceeds the 12 percent expected in the U.S.
The Institute for Fiscal Studies said earlier this week that raising taxes on the highest earners will prompt them to shift income into capital gains or possibly emigrate.
To contact the reporter on this story: Jennifer Ryan in London at [email protected] To contact the reporters on this story: Mark Deen in London at [email protected]
Last Updated: April 22, 2009 12:52 EDT
Share | Email | Print | A A A
By Mark Deen and Jennifer Ryan
April 22 (Bloomberg) -- Chancellor of the Exchequer Alistair Darling increased tax on Britain’s highest earners to 50 percent in an effort to contain a swelling budget deficit and play to the Labour Party’s traditional supporters.
The highest rate of income tax will kick in at 150,000 pounds ($218,000), Darling said today in his annual budget statement. The new rate, which compares with about 40 percent at present, will come into force next April.
The move, which comes as Labour trails the opposition Conservatives in opinion polls, reflects public anger at bankers with outsized pay packages. Darling, who predicted the largest budget deficit among the Group of 20 nations, also announced fresh support for the unemployed amid the worst recession since World War II.
These are “some of the first steps in creating fair tax system,” said Brendan Barber, general secretary of the Trades Union Congress. Britain’s unions are the biggest financial backers of the Labour Party.
The new rate is higher than the 45 percent planned in November and will come in a year earlier than the government originally expected. Darling also withdrew breaks for pension contributions for the highest tax bracket.
Darling’s View
“I am not proposing to increase taxes on income for this year,” he said in Parliament. The money will “help pay for additional support for people now.”
Voter anger with wealthy bankers soared earlier this year as Prime Minister Gordon Brown had to commit more public funds to shore up U.K. lenders. About 82 percent of Britons want bankers’ salaries capped and 85 percent support a limit on bonuses, polling by Populus Ltd. shows.
The pressure is such that the opposition Conservatives said they won’t make rescinding the new tax a priority if they win the next general election, which has to be held in June 2010 at the latest.
The changes also underline Darling’s need to rein in the U.K.’s budget deficit, which he said today will total 703 billion pounds during the five years through April 2014.
This year’s shortfall of 175 billion pounds, or 12.4 percent of gross domestic product, exceeds the 12 percent expected in the U.S.
The Institute for Fiscal Studies said earlier this week that raising taxes on the highest earners will prompt them to shift income into capital gains or possibly emigrate.
To contact the reporter on this story: Jennifer Ryan in London at [email protected] To contact the reporters on this story: Mark Deen in London at [email protected]
Last Updated: April 22, 2009 12:52 EDT
