Martin Broughton, the outgoing president of the CBI, has called the government's 50p income tax rate an act of "economic vandalism".
Broughton, also chairman of British Airways, was speaking at last night's CBI annual dinner, where Gordon Brown gave a keynote speech.
He said Labour had used the rise in taxes to divert attention from the UK’s debt mountain, and criticised the government for failing to produce a credible plan for bringing public borrowing under control.
"To try to divert media attention from this failure by tearing up the manifesto commitment to the country’s entrepreneurial class — the major job creators — was nothing short of economic vandalism. What’s more — the tax take is likely to be minimal,” he said.
Broughton also called the Treasury's economic forecasting into question. “The use of heroic growth assumptions, together with a timetable extended to 2018, amounted to a serious failure to address the deficit in a way which gives confidence to buyers of our public debt,” he added.
Gordon Brown defended the tax rise by telling CBI members it was a necessary evil to plug a gap in tax revenues: “I do not like doing it as much as you will not like the measure, but I say to you: if we are to restore our public finances, coming through what is a difficult recession where we have had to wipe out billions of pounds as a result of banking failures, where we’ve got a massive loss in tax revenues as a result of the failures in the financial sector as well the loss of revenues in the corporate sector, we have a duty to act.”
Business leaders have warned that the 50p rate, which will apply to earnings of more than £150,000 from next April, will drive wealth creators from the UK.
© Crimson Business Ltd. 2009