Senior Tories urge George Osborne to cut tax for highest earners again
George Osborne should slash tax for top earners further still, say senior Tories after figures showed a cut from 50p to 45p raised an additional £8 billion.
The Chancellor said income tax data for 2013/14 "completely" defied predictions made by Labour that cutting the rate would cost £3 billion and give top earners an average £10,000 tax cut.
HM Revenue and Customs (HMRC) had previously assumed cutting the rate to 45p would cost £100 million, a stance backed by the Office for Budget Responsibility.
It is understood that the figures quoted by Mr Osborne do not take into account any changes in the way higher earners were paid, such as banks deferring bonuses until the tax cut came into force.
However the increase in revenues prompted calls from senior Tories for a further cut to "harvest" cash from top earners.
Tory grandee Sir Edward Leigh told the Daily Telegraph that a further 5p tax break would benefit business and the Treasury.
He said: "These are welcome figures and I hope the Chancellor will act on the logic of them by reducing the top rate further.
"The case is unanswerable that if we reduce the top rate back down to 40p, it will not only provide a wonderful fillip for entrepreneurs but also provide us with more revenue."
David Davis urged Mr Osborne to consider a further reduction, telling the newspaper: "These figures show once again that you can choose how to deal with the well-off - you can choose to punish them, or you can choose to harvest them.
"If you want extra taxes for schools and hospitals then you should choose a tax rate that they will pay."
Tory MP Kwasi Kwarteng said the figures were vindication for the Chancellor, who "took a lot of flak" for cutting the 50p tax rate set by Labour.
He told the Telegraph: "It is quite widely understood that if you push up taxes beyond a certain point then you end up getting less money. These figures show that Labour went beyond that point."
The HMRC statistics show that in first year of the reduced 45p rate, top rate taxpayers paid £46 billion in income tax, 28% of total revenues and £8 billion more than in 2012/13.
They also showed that total income tax take also increased by £8 billion, primarily driven by the increase paid by top rate taxpayers but not entirely.
HMRC conducted no analysis of whether companies changed the way they paid employees to take advantage of the tax cut.
During Treasury questions in the Commons, the Chancellor said on deficit reduction: "We want to make sure this is done fairly and under this Government the richest pay a higher proportion of income tax than under the last Labour government."