Analysis: businesses split on 50p tax rate

Laura Kuenssberg

Former Business Editor

Mixed views on the 50p tax rate within the business community Credit: REUTERS/Catherine Benson

The warm up to the budget, in less than three weeks, is well under way.

500 business bosses have written a coordinated letter to the Daily Telegraph, calling for the 50p tax rate to be scrapped, arguing that it actually cuts income to the UK Treasury and puts off business from coming here.

So far, so clear - 'business' calling for the same thing. But having asked many different companies about just this issue over the last six months the view is not always as clear.

Yes, there are those like our Business Club member, Kavita Oberoi, a Derbyshire entrepreneur who argues coherently that it sends out precisely the wrong message.

She believes for those who are trying to start business, and create jobs, the prospect of having to give more than half of it back to the taxman (once you factor in National Insurance) is a brake on aspiration and does more harm than good.

But I remember distinctly one senior business figure saying to me it was an 'irrelevance', and that it 'makes no difference'.

In a very un-scientific way I would suggest that a small majority of business would rather the tax were scrapped, but when I ask companies what are the obstacles that hold them back, it is rare that the 50p tax is at the top of their list.

Just as economists do not agree on the impact of the tax, the business community, which remember is almost entirely made up of small firms, does not have one view on this tax.

Just as well for the Chancellor, as the chances of him finding the money to get rid of it are slim.