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50p rate tax likely to be dropped at some stage

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The 50 per cent income tax rate looks set to be scrapped at a future date.

In BBC interviews, Vince Cable, the Business Secretary, conceded that the tax band was only a temporary measure and could well be dropped.

The Chancellor, George Osborne has already instigated a review of the 50p tax rate, which applies to those earning more than £150,000 a year, a move that indicates the Treasury may be ready to abandon the band as soon as 2013.

Vince Cable told the BBC: “I and George Osborne agree that we have to move away from extremely high marginal rates of tax on income, including that the 50p rate of tax.

“It moved up to 50p in an emergency because we had to have a sense of solidarity that everybody was bearing some of the pain, and the chancellor said in the budget that we’re going to have to move away from that. I agree with him.”

To offset the loss of the top rate of income tax, Dr Cable suggested the Government may turn its attention to a higher property levy.

He continued: “But it needs to be a change which is fair overall and does take account of the fact that the wealthy have got to pay their share. The emphasis may well have to shift from high marginal rates of tax on income which are undesirable, to taxation of wealth, including property, and the chancellor said as much as that in his Budget.”

In a separate interview, the Deputy Prime Minister, Nick Clegg, said that any move would not necessarily mean a return to the Liberal Democrats’ proposed mansion tax but could involve a review of council tax or stamp duty.