Clause 6
Finance Bill
4:45 pm
Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
I shall come to the implications for some of the other rates in a moment. The point I am making is about the 50 per cent. rate on income above £150,000, but there are some knock-on consequences, which I will spell out in a moment.
In answer to the hon. Gentleman’s question, yes, this measure is consistent with the competitiveness of the UK as a place for investment in business, consistent with fairness, and consistent with the consolidation that is needed over the next few years. The measure will raise more than £6 billion in its first three years. That estimate takes into account, as all our estimates do, behavioural consequences of the change, about which we had some discussion this morning. As I also mentioned this morning, the assumptions that underpin our view of the yield coming from this measure were confirmed by the Institute for Fiscal Studies in its post-Budget briefing as “not unreasonable”.
Some have suggested that the behaviour impacts are such that we should not make that change. I do not agree with that, because without this measure, focused on those with the very highest incomes, funding would need to be found elsewhere. Our choice has been to look, in this clause, to those who are in the best position, who are most able to afford to pay, and whose incomes have risen a good deal faster than the average over the last decade.