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London will pay price for this Budget, says Mayor
Jonathan Prynn23 Apr 2009
Boris Johnson today led criticism of Alistair Darling's "anti-London" Budget, claiming that it will damage the capital's status as a world city.
The Mayor said there was "a lot to hurt" London in the Chancellor's package unveiled in the Commons yesterday, particularly the new 50p top rate of tax for earnings over £150,000.
He told the Standard: "The Chancellor's barrage of measures to raise more tax from high earners affects London and Londoners far more than anywhere else. Our capital is the engine room of the UK economy, generating 17 per cent of the UK's GDP each year. Penalising high earners with higher taxes risks undermining the capital's competitiveness and runs the risk of driving highly skilled workers away and deterring others from coming."
He also pointed out that many of the more welcome announcements in the Budget will do little to help London.
"Many of the housing measures are too small to help the London housing market as prices are higher here. Also, the capital will benefit very little from measures to help the oil industry, manufacturing or the car industry," he said.
"The boost to low carbon industries is very welcome but I want to make sure that London gets its fair share."
His comments came amid growing anger about the imposition, from next April, of the highest top rate of tax since 1988. Other changes that will hit high earners include the abolition of higher rate tax relief on pension contributions and the loss of tax allowances for six-figure earners.City figures have warned of a brain-drain from London as the 50per cent rate will be one of the highest in the developed world.
Baroness Jo Valentine, chief executive of business group London First, said: "The biggest disappointment is the rise in tax on high earners. The tax rise to 50per cent, and changes to tax relief on pension payments, shows that it is a political budget, not an economic one.
"This tax rise, even by the Government's own figures, raises less than half a per cent of what they plan to borrow - small beer really. Indeed, the Institute of Fiscal Studies estimated that it might raise even less than that.
"It may be understandable that some of the Government's supporters want to punish high earners, but actually these are the very people who we need to stay in London, to drive our recovery.
"Two-thirds of what it costs to employ a company director in London will go not to him or her but straight to the taxman.
"That might lead some to stay away and others to move away and take their support offices, hundreds and thousands of jobs, with them.
"The Chancellor emphasised the opportunities presented to the UK by global trade. We shouldn't start by encouraging some of our best people to emigrate to friendlier tax climates."
A survey by jobs website eFinancial Careers found that 49per cent of financial sector workers questioned are so unhappy with the 50 per cent tax on high earners that they are now hoping to leave the UK.
Reader views (3)
They say they'll leave London..... but where are they really going to go?
New York tax is already at about 45% with capped bonuses.... and while Singapore is only 17-18% tax...there is nothing to do there except permanently sweat.
- Andy, London, 24/04/2009 00:37
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Here speaketh the man who puteth up public transport fares for millions of London Commuters, most of whom unlike him do not have the privelege of 2 jobs!!
- Melvyn Windebank, Canvey Island, Essex, 23/04/2009 18:21
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There are plenty of people who will takes those positions and can do them successfully regardless of the Tax implications because of the love for this country and it's capital. We need to drive out the greed and this measure will help ensure that.
The way through the recession will be to knuckle down and pull together, if you don't like that then go elsewhere. The incentive to work in this country should be the country and it's culture and not money.
When people talk of talent in this way what they really mean is whether you went to the right school or not. I know this to be the case through a relative that was once a director at Citi Group. The current Mayor is a prime example, is he really fit to be a politician? It's not like claiming to be an artist, the implications are vastly more significant. Is Boris talent? Or did he go to the right school?
- Paintercom, London, UK, 23/04/2009 17:08
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