Boris Johnson, Mayor of London, has called for a reduction in the cost of National Insurance and the top rate income tax. He believes that reducing the 50p top rate of income tax would be beneficial to our economy as it would mean we could compete with our rivals around the world.
Although George Osborne has said that his plans for economic recovery are on target, the GDP results released yesterday say otherwise. The results showed economic growth of only 0.2% in the second quarter in comparison with the 0.5% growth in the previous quarter. It is this result which has led Mr Johnson to make these comments.
In April, National Insurance increased to 12% from 11% and at the moment employees earning over £150,000 are taxed at 50%. Mr Johnson believes that reducing this percentage will encourage high earners to continue to work in the UK and as a consequence, the economy will receive a boost.
Speaking to the Daily Telegraph he said, “You’ve got to look at ways of stimulating growth now, and certainly I think you should look at National Insurance. You should look at ways of stimulating consumption confidence in the market.” He went on to say that reducing the top income tax rate would give a “signal that London is open for business.”
The Shadow Chancellor for Labour has put forward his opinion that Mr Osborne is “in denial.” He went on to claim that he believes the slow growth in the economy is a result of increasing VAT and cutting spending.
In March, Mr Osborne put forward his belief that income tax and National Insurance should be fused into one payment in order to simplify the UK’s monetary system.
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