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Lawson: Cut top rate income tax

Former Tory chancellor Lord Lawson has urged George Osborne to use his first all-Conservative Budget next month to cut the top rate of income tax to 40p.

Lord Lawson said the move would attract business to Britain while costing the Exchequer little in lost revenues.

"I would strongly support this: It would significantly enhance the attractiveness of the UK as a place to do business, at no cost in terms of lost revenue," he told the Financial Times.

"That was the experience when I brought the top rate down to 40 per cent in 1988 and it is even more relevant today."

His intervention comes as Mr Osborne is reportedly considering a further cut to the top rate of tax on earnings over £150,000 when he delivers his Budget on July 8.

In the last parliament he reduced it from 50p to 45p but was prevented from going further by the Conservatives' Liberal Democrat coalition partners.

A further reduction now would, however, be highly controversial at a time when ministers are planning £12 billion in welfare cuts.

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