Johnson calls for personal tax cuts

The Tory mayor told the Daily Telegraph that Chancellor George Osborne agreed to cut taxes and singled out the previous Labour government's 50p top rate of income tax for special criticism.

Mr Johnson suggested the Chancellor might address the personal tax issue in March's Budget, adding: "Can we endlessly go on with a tax rate that is higher than not just America and Japan but also France, Germany and Italy? All these countries we've always beaten on tax."

Mr Osborne has described the 50p rate as a "temporary" measure but there are no plans as yet for its repeal.

The Mayor said: "I think we need to set out a pretty clear direction of travel, a pro-enterprise direction of travel.

"I understand about 50p tax politically but there has got to be a sense of where we are going and where we want to be as a country."

The 50% tax rate has had many affects. Some have just accepted it as a necessary consequence of the financial crisis and something that has been needed to balance the books. However, many more have taken it as a wake up call to look more carefully at their own tax planning with simple steps being taken such as equalising investments between spouses to use a lower earning spouse's lower tax rates.

Others have taken more complicated steps such as investing in tax shelters marketed by financial advisors. We have also seen many individuals who are internationally mobile considering accelerating their plans to leave the UK as other countries introduce their own attractive tax regimes to entice these people back home and the missing statistic which will have the greatest implication for the country as a whole and its recovery is how many individuals and businesses have chosen not to come to the UK. It is therefore welcome that Mr Johnson is raising the issue of the 50% rate causing the UK to be uncompetitive as others may fear the consequences of being seen to be supporting the "fat cats".

For further information, contact:

Tim Stovold, partner at Kingston Smith LLP
Tel: 020 7566 3814
Email: tstovold@kingstonsmith.co.uk