50p tax rate is raising less than expected

The Telegraph this evening has news that the 50p tax rate is, predictably, raising less than expected. A report from the HMRC on the effectiveness of the 50p rate should accompany the Budget. If that report indicates that a lower rate would raise more revenue, then it will be a real test of the coalition. Will they leave the rate in place for symbolic reasons or will they reduce it?

The defence of the 50p rate has always been that it was necessary to maintain public support for deficit reduction. But it sends out an awful signal about Britain’s approach to success. Rewards for failure are—clearly—a bad thing, but rewards for success are a necessary part of a proper market economy.

Obviously, lowering the 50p rate would have to be part of a wider tax reform programme. But the end of the 50p rate would send out a potent message that Britain is once again open for business.