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News, gossip and insight from PoliticsHome Editor Paul Waugh

The 50p Wriggle

So, will the 50p tax rate stay to 2015 or not?

The Telegraph splashed today that the supertax would remain in place until 'at least' the next election.

But hang on, David Cameron has now given an interview to Sky News in which he stresses that the 50p rate is 'temporary'.

Now, of course, the rate can still be 'temporary' even if it is axed after 2015.

And in many ways, the Telegraph story echoes what Government insiders have been saying for some time: that it would be political suicide to axe a tax on the rich at a time of austerity.

Crucially, the Chancellor's Autumn Statement decision to keep squeezing public sector pay to 2015 would make any tax cut very toxic ahead of a general election.

Anyone who listens to Osborne ally Matt Hancock on the need to crack down on City excess will guess that this is not something the Tories want to be outflanked on by the Lib Dems, let alone Labour.

Cameron told Sky "As I've said, we've got to demonstrate fairness over the coming years...". That phrase would point to keeping the 50p rate.

 Yet he then reverted to the script that many Tory MPs prefer: "It's temporary, but these things will be decided in the Budget in the proper way...We've also got to look at the evidence for the 50p tax. Is it raising a lot of revenue, and if it isn't then clearly there will be a lot of question marks over it. "

That leaves some fair wriggle room, as the PM was obviously at pains to point out.

The Chancellor is expected to set up an annual review of the revenue from the 50p rate: is it possible that it could go if the revenue decreases as firms find ways round it?

The debate will continue withing Government I suspect, particularly given that Cameron is not too enthusiastic about replacing the 50p tax with the Lib's mansion tax.

Perhaps the most difficult thing is fixing a figure on just how much the tax raises - or doesn't. The Telegraph today pointed out that the HMRC would report a 'surge' in revenues totalling 'hundreds of millions of pounds'. But only last November, it also reported that the tax would cost the taxpayer £1bn a year.

 

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