The Treasury Select Committee have claimed within their report that the cost of reducing the level of top tax from fifty-pence to forty-five pence “could be significantly more or less” than the £110 million citied by the Chancellor; adding: “The cost and benefits of reducing the additional tax rate to 45p are both highly uncertain, and could be significantly more or less than the cost included in the Budget.
"We recommend that HM Revenue & Customs publish in due course a comprehensive assessment of the effect on the Exchequer of the new 45p rate."
Along with being critical of the decision to reduce the top rate tax, the Committee have also cited within their report the need for the government to offset the pain quantitative easing is causing savers, by saying ore information was needed on the effects of the £325 billion of new money effectively "printed" by the Bank of England.
“Loose monetary policy, achieved through quantitative easing and low interest rates, has redistributional effects, particularly penalising savers, those with 'drawdown pensions' and those retiring now.
“The Bank of England has argued that some of those effects may be mitigated by the increase in asset prices stimulated by quantitative easing. While the aggregate of savers and pensioners may have received some benefit from higher asset prices, there will be many individuals who will not have benefited.
“The Bank of England, after, where appropriate, consultation with the Treasury, should provide its estimate of the overall benefit and loss to pensioners and savers from quantitative easing.”
Following the highly critical report, a Treasury spokesperson has said they will “study the report and respond in due course.”
For more information, please visit www.milsted-langdon.co.uk
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