Who Was A Millionaire?

16th June 09 - Who was a millionaire?

According to HM Revenue & Customs, the number of UK citizens in the top income tax band will fall by one million this tax year, that is 2009/10. This represents a quarter of those who paid the top rate of 40% last year. The reason is pretty obvious. Bank workers bonuses gone or down, white collar workers not actually working and many professionals on short-time or reduced profit share. If we add to this the reduced take from corporation tax as company profits fall and much less stamp duty due to the fall in house prices and number of transactions, it is obvious that total tax take will be well down.

John Whiting of PricewaterhouseCoopers (Pwc) warned that the Chancellor’s plan to raise the top tax threshold to 50% next year may well backfire. "These predictions show how significant a contribution higher rate tax payers make to the Exchequer - and how important it is to keep them contributing. There is a risk with increasing tax rates that some of the higher rate geese will waddle off and lay their tax eggs somewhere else." The point about contribution can be supported by figures in that even with one million less payers, the top band of tax will still generate about 39% of all income tax receipts.

It is interesting how the "haves" and the "have nots" seem to perpetuate whatever the economic climate. While the figure might not be quite right, the same Pwc has so far billed around £74 million on the Lehman Brothers administration and it apparently has a good two year to run and is for the UK part only (there are some eight other administrators around the world). Maybe that is why if one strolls on the Southbank of the Thames any weekday evening from 5 pm onwards it has all the attributes of New York city at the height of the boom times. No vacant seats at the Thames-side watering holes, no spare seats in the sea-food lounge. You can bet that most of these are not on the van production line in Luton, never were and never likely to be.