By Daniel Hunter

A letter penned by over 500 business leaders has urged the 50p top tax rate to be scrapped in the forthcoming Budget.

The letter, sent to the Daily Telegraph, said that the top tax rate was reducing government income and damaging the economy.

"Given the current state of the UK economy, we urge the chancellor to urgently consider scrapping the top rate of tax in his forthcoming Budget," the letter said.

"The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.

"We believe the richest should help the poorest in society. 1% of taxpayers are forecast to contribute nearly 28% of income taxes.

"But penalising high earners through an unfair, politically-motivated tax puts populist politics before sound economics.

"The result is that the 50p tax is set to reduce government income and damage the economy, the public services and charitable giving."

Simon Walker, Director General of the Institute of Directors, endorsed the letter, that was signed by 537 business leaders.

“This letter is the voice of people who actually run businesses, create jobs and make sure that there are goods and services available to buy. These people know what works, and what damages the economy. They are clear that the 50p rate does real economic damage," he said.

“At the same time, the 50p rate does nothing for the Exchequer. In the short term, it may raise some revenue, before many people have adjusted their behaviour. But in the longer term, it will reduce incentives to expand businesses, encourage people to put more effort into reducing their tax bills, and discourage highly-skilled foreigners from bringing their talents, and their taxable income, to the UK for a few years. The 50p rate will actually reduce the tax take from high-income people.

“Scrapping the rate, and encouraging business, would increase the tax take and reduce the tax burden on lower-income people. If there was ever a win-win for the Chancellor, scrapping the 50p rate is it.”

Join us on
Follow @freshbusiness