Boris Johnson: cut top rate of income tax but only if firms pay living wage

Boris Johnson reading on tube

Boris Johnson is calling for the top rate of income tax to be cut to 40p and for large firms to pay the living wage to employees just days before the first Conservative budget for 19 years.

The former minister John Redwood has also backed reducing the top rate from 45p – a highly controversial move which would be labelled as a further tax cut for millionaires.

The chancellor, George Osborne, indicated on Sunday that there would be no such cut in Wednesday’s budget as he disclosed that the government had now found £12bn of cuts to Britain’s welfare bill.

In his Daily Telegraph column on Monday, the mayor of London wrote: “Nigel Lawson has recently argued that the top rate should go back down to 40p, and many Conservatives agree. I am among them.”

This could only be implemented if larger firms raised wages for their lowest paid workers, Johnson argued.

“There is a very serious problem, and we would need to sort it out before any such top rate tax cut could go ahead. That problem is fairness, and how such a cut would be seen by the wider population.

“And as for low pay, it isn’t a function of market forces. It’s being propped up by the taxpayer. That needs to end. And that means business has got to start paying people a wage they can live on.”

Some businesses have already adopted the living wage of £7.85 an hour and £9.15 an hour in London, rather than the adult national minimum wage of £6.50.

Appearing on BBC Radio 4’s Today programme, Redwood said a top rate tax cut would result in an increase in revenues for the Treasury.

“The way to get more money off the rich is to have tax rates that the are prepared to pay. We have just seen a surge in revenues after we cut the 50p rate to 45p and that is very encouraging.

“There are some very rich people who have a privilege that the rest of us don’t have. Those of us who get a monthly pay packet from our employer can’t decide how much we are going to be paid according to how much tax. We need the money we are paid.

“But very rich people have the choice of where they book income or whether they take income at all. If they have their own company, they do not have to pay themselves so much if the tax rate is penal. That is exactly what happened with the 50p tax rate.”

The shadow chancellor, Chris Leslie, said it would be “an act of gross irresponsibility and unfairness” for the government to cut the 45p rate for those who earned more than £150,000.

On Sunday, Osborne said his priority was reducing taxes for lower and middle income earners.

Appearing on the BBC’s Andrew Marr Show, the chancellor said his priorities were raising the tax-free allowance to £12,500 and raising the threshold at which people begin paying the higher rate to £50,000.

There had been speculation that the chancellor would use his first budget as part of a Conservative majority government to reduce the top rate.

Powered by article was written by Rajeev Syal, for on Monday 6th July 2015 10.16 Europe/ © Guardian News and Media Limited 2010


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