Cameron to quit 50p tax scrap move

It's thought David Cameron and George Osborne have abandoned any hope of scrapping the 50p tax rate for top earners for the time being. Until recently many have claimed the 50p tax rate - paid on every pound earned more than £150,000 - damaging to the UK economy, as well as affecting only a limited number of earners. So why have they changed their mind?

Financial pressure

Probably on two issues. First, public relations. Cameron, a skilfully adept spin doctor himself, knows how cutting this tax would look to millions on average incomes struggling to keep up mortgage and rent payments and feed their families. More riches for the well-off.

Secondly, many originally condemned the move - made by Gordon Brown in 2010 - as ineffective, hitting not just only a limited number of people but also not raising a huge amount of money. In fact the tax hits actually well over 300,000 UK earners and the tax, it's thought, has raised quite a bit of dough for the government.

Revenues up

The Telegraph reports that Her Majesty's Revenue & Customs (HMRC) is currently preparing a report that will show a "surge" in revenues of hundreds of millions of pounds. If that is the case, it will make removing the tax a lot harder next time the issue comes back for serious attention.

In reality, many earning this amount of money (and substantially more) will already be circumventing the 50p tax threshold through legal tax avoidance measures. You only have to look as far as people like Tony Blair.

His earnings have soared in the last year. But little of this surge in turnover - one of his companies recorded a turnover of £12m - has reached the tax man. It's thought his current tax liability is around £315,000 thanks to almost £8m going on "administrative expenses".

At least he's not expecting a refund (as far as we know). Or stockpiling 'losses' to soften future tax obligations, as Barclays was accused of recently.
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