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Controversy arises as Jeremy Hunt proposes to increase the highest tax rate to 50p in the pound.

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Jeremy Hunt faces backlash over surprise budget plans to raise top tax rate to 50p despite warnings it would breach the 2019 Tory manifesto

  • Chancellor Jeremy Hunt is considering surprising moves to raise the current 45p rate
  • He is also looking for alternative options to reduce the top rate of the tax threshold
  • Mr Hunt and Rishi Sunak have already agreed to extend a four-year freeze on income tax thresholds for another two years

Rishi Sunak faced growing opposition last night over budget plans to bring back Labor’s top tax rate of 50p.

The Mail revealed yesterday that Chancellor Jeremy Hunt is considering surprise moves to raise the current 45p rate, despite warnings it would break pledges from the 2019 Conservative manifesto on tax.

Hunt is also looking at alternative options to reduce the minimum at which people start paying the top rate from £150,000 to £140,000.

A British government source said last night that the proposals are “not kites” and one or both measures are now likely to be included in next week’s budget.

Economists have warned that the move will raise a bit of extra cash, as high earners will find ways to avoid it or even move abroad.

Yesterday The Mail revealed that Chancellor Jeremy Hunt (pictured) is considering surprise moves to raise the current 45p rate, despite warnings it would break pledges from the 2019 Conservative manifesto on tax.

Paul Johnson, of the Institute for Fiscal Studies, said the higher rate adjustment was unlikely to raise significant sums for a government scrambling to plug a £60bn gap in public finances.

The Treasury estimated that scrapping the rate entirely would cost just £2 billion when then-Chancellor Kwasi Quarting proposed it in his ill-fated mini-budget in September.

Johnson said that while raising the top rate might help convince people the budget package was fair, it was unlikely to raise much money.

Is it a good way to collect a lot of extra money? No, because increasing the higher rate brings a huge amount of uncertainty about future revenues and, according to a central estimate, very little.

Business leaders and Tory MPs have also warned it will undermine ambition and damage the UK’s reputation as a place to do business.

John Longworth, of the Independent Business Network, said this is “not a good signal for the UK in terms of people who work hard and encourage projects”. Longworth, a member of the government’s regulatory policy agenda, also hammered out broader plans for a £25bn tax hike in next week’s budget, saying the government was “taxing entrepreneurs, taxing people, taxing labour”.

Chancellor of the Exchequer, Jeremy Hunt, arrives for a Cabinet meeting at 10 Downing Street on November 1, 2022 in London, England

Chancellor of the Exchequer, Jeremy Hunt, arrives for a Cabinet meeting at 10 Downing Street on November 1, 2022 in London, England

Describing the government as “socialist”, he told the BBC: “These are the things you would expect from a Labor government”.

The tax raid is expected to be the largest since Alistair Darling’s 2010 budget and which then Conservative Party leader David Cameron has described as a “tax time bomb”.

Former Cabinet minister David Jones has warned that many Tory MPs are becoming “extremely concerned” about the looming tax plans. “The conservative position is that high taxes act as a dampener on the entrepreneurship and ambition that we want to encourage,” he said.

Hunt and Rishi Sunak have already agreed to extend a four-year income tax threshold freeze for another two years, despite expectations that it will attract an additional three million people into higher tax bands.

Future limits for payment of National Insurance and inheritance tax will also be frozen by the government.

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