Last week the Deputy Prime Minister made a speech on growth. I applaud the sentiments and actions from this speech but I have to ask the question: if Nick Clegg and Vince Cable are serious about growth, why are headlines appearing suggesting Nick Clegg will veto George Osborne cutting the economically damaging 50p top rate of tax and Business Secretary Vince Cable describing its removal as a childish fantasy?
Last week, I received an answer to a written question to the Treasury asking if the full economic impact of the 50p rate will be taken into account in the review of its effectiveness, and I was pleased to learn that "HMRC will consider all available evidence around the impact of the 50% rate including data from the 2010-11 self-assessment returns which will become available next year." As I have written before, I believe the rate is costing the economy untold damage with the super rich able to move their money and assets so quickly.
And if Nick Clegg and Vince Cable don't believe me, perhaps they could listen to David Laws in their own Party who, when commenting on Ed Miliband, rightly pointed out that "he has generally taken the position that cuts should be delayed and that high tax rates (including the 50% tax rate) should be retained. Ed is getting all the big economic decisions wrong, and leading his party into an economic policy cul-de-sac." There is also former Labour Treasury Minister Kitty Ussher, who has urged Labour to drop its support for the 50p rate when writing in the Wall Street Journal. I would suggest that both of these figures have come out against the rate as they recognise the long-term economic damage it is causing.
Mr Clegg talks about it catching the super rich. Well, the super rich are relocating from this country to avoid it. What it is doing in actuality is catching many families who, although have a comfortable lifestyle, still have mammoth mortgages, particularly in the South East, and would laugh at the notion that they were super rich.
Vince Cable has said "Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear", conveniently forgetting two things. Firstly, revenues rose when Nigel Lawson cut the top rate of tax from 60% to 40% in the 1980s – existing revenue can easily disappear with one of the highest top rates of tax in the world, and secondly, Capital Gains Tax was set at 28% for optimal revenue – is income tax so different to Capital Gains Tax?
The Conservative backbenchers are being asked to accept many unpalatable compromises to satisfy our Coalition partners. The watered-down NHS reforms, the lack of movement on a British Bill of Rights, the vetoing of a stronger line on the EU. With the 50p tax rate, we have a chance to show we are serious about growth and that we want to encourage our own and the world's entrepreneurs and companies that Britain is a place to do business. What will not encourage these people is our Deputy Prime Minster and Business Secretary signalling their desire for Britain to maintain one of the highest top rates of tax in the world. I urge both of these figures to show statesmanship, not to pander to the bitter socialists who still cling to the notion that we can tax our way to prosperity and back the abolition of this top rate of tax. If they are serious about growth, now is the time to prove it.