Taxation Assignment Example | Topics and Well Written Essays - 1500 words - 2

Taxation - Assignment Example It was the first ever increase as the highest rate of income tax in the history of UK for over three decades. In 2010,the Chancellor Alastair Darling announced the 50% tax rate. With effect from April 2010 onwards, taxable income above  £150,000 in UK will be subject to a new top rate of income tax of 50%.The 50% additional rate of income tax was announced by the erstwhile labour government in 2010 was mainly intended to rescue the UK’s economy after the 2008 financial crisis. As per HMRC data,  £10 bn was raised during the three years when the top 50% rate was in force. The present UK government has reduced the top rate to 45% with the effect from April 2013 onwards. Evidence from UK and around the globe demonstrates that punitive tax levels either 50% or 45% will result in poor revenue collection as compared to modest rates. Young & Saltiel (2013) study found that behavioural reaction to the higher tax rates is more robust, and this is likely to hurt UKs tax receipts. The 50% additional rate of income tax in UK had a bad impact on UKs economy as its architects themselves confessed that the scheme was introduced without economic objectives. Young & Saltiel (2013) found that the policy is heading for failure as it resulted in the flat growth for a decade and ended in  £350bn of lost revenue. This essay will analyse whether the UK government restore the 50% additional rate of income tax?† or not . As per Ed Balls of Labour Party, that his party will reintroduce 50% additional rate of income tax for those whose annual income is above  £150,000 if it is voted to power in the coming election. According to him, as per recent statistics, those who are earning more than  £150,000 paid  £ 10bn more by way of taxes in the last three years starting from April 2010 when the rate was 50% for them. Again, it was reduced to 45% in 2013 by the present Coalition government. As per Ed Balls, when the