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50p tax rate doing ‘lasting damage’, say economists

The Chancellor George Osborne is being urged to scrap the 50p tax rate amid concerns over the UK economy.

The call came from a group of 20 leading economists, including two former members of the Bank of England's Monetary Policy Committee (MPC).

In a joint letter to the Financial Times, the economists argue that the 50p tax rate is doing ‘lasting damage’ to the UK economy and should be removed at the ‘earliest opportunity’.

The letter also states that the UK has ‘one of the highest personal tax regimes in the industrialised world, making it less competitive internationally, and making us less attractive as a destination for both foreign investment and talented workers’.

‘Only by returning to an internationally competitive tax regime will Britain enjoy long-term sustainable economic growth,’ they added.

The 50p income tax rate was introduced in April 2010 and is paid on earnings over £150,000.

Last month Osborne confirmed that HMRC is reviewing the 50p top rate of income tax, fuelling speculation that it may be abolished next year.

HMRC is examining its data to assess whether or not the 50p tax rate is generating money, although the figures will not be known until at least the end of the tax year next April.