Labour aims to cut 50p tax rate 'as soon as it is sensible'

THE government would wish to reduce the 50p top rate of income tax "as soon as it makes sense to do so", City minister Lord Myners said yesterday.

But he said the Treasury had "significantly reduced" the anticipated tax take from the new rate, which comes into force in April, because of "behavioural changes".

Baroness Valentine, a crossbench peer and chief executive of the business group London First, warned at question time that the top rate "will do little to increase tax revenue and instead may in fact drive away many of those contributing the most to the Exchequer".

Lord Myners told her: "It is a matter of meeting the finance requirements at a time when the public sector has a very large deficit. The broadest shoulders must quite rightly bear the greatest burden.

"We're talking about the top less than 2 per cent of the population by income, a section which has enjoyed an increase in earnings more than double the median over the last ten years."

Tory former Cabinet minister Lord Forsyth asked: "When Lord Mandelson said the top rate of income tax at 50 per cent was going to be a temporary measure, was he speaking for the whole government?"

Lord Myners said it was not possible to "drive a wedge" between him, Chancellor Alistair Darling and Business Secretary Lord Mandelson over the issue.

"We would wish to see a reduction in the top rate of tax as soon as it makes sense to do so."

Lord Newby, for the Liberal Democrats, asked what discussions Lord Myners had had with the authorities in Switzerland, which is one of the most often cited destinations for people seeking to avoid the 50p rate.

Lord Myners said: "I think one would need to be very, very careful about taking into one's financial system those who were seeking to escape from good and active prudent supervision and regulation."