Budget 2012

The Champagne flows in the city

The top rate of tax has been cut for high earners – and corks are popping in the Square Mile, finds Owen Jones

Of all the arguments that George Osborne could present to the House of Commons in favour of reducing the 50p tax band, public opinion was not one of them. A recent poll for The Independent revealed that the vast majority of Britons across the social scale had wanted it to remain in place. Even most Conservative voters backed the 50p tax, which was introduced at the fag end of Gordon Brown's government.

In the City yesterday, there was relief and jubilation among high earners. Liz Green, 39, who works in financial insurance and pays the 50p tax, summed up the mood in the Square Mile as "Delighted!" and said they would "all be out in the wine bars celebrating".

John Gully agreed that champagne would be flowing in the Square Mile. "I think there needs to be a levelling out of tax," he said. Like many other financial workers, he felt this was a big step in the right direction. Sue Brown, 47, who works in insurance, added: "It's about treating everybody fairer."

Other City professionals hinged their arguments on the alleged failure of the tax to generate revenue and its impact on entrepreneurship. Christian James, 44, a banker, said the news was "fantastic". "The higher rate doesn't create any higher revenues, and wealth creators are working to create jobs. We need more carrot and less stick." Although welcoming the reduction in corporation tax, he argued it should go even lower. "It should be less than 20 per cent, encouraging corporations to come here and employ more people, train more people. Taking is the wrong approach, incentives should be the way to go."

Tom Carey, a 23-year-old insurance broker, agreed, arguing that there would be a "trickle-down effect" of wealth if taxes were reduced much further.

Some argued that the tax had driven the wealthy to foreign shores. "If you can get a better life somewhere with lower taxes and where it's sunnier, why not?" asked Nick Morgan, a company director in his late 30s. "The rich pay enough tax as it is."

Banker Adrian Thompson, 34, agreed, claiming to know a number of businesspeople eligible for the tax who had left the country. But despite paying the top rate himself, he stayed put in London. "I'm not rich enough to make it cost-effective to go elsewhere, but it's also because of lifestyle reasons, and because I've got family here."

A common sentiment expressed in the Square Mile was that those paid £150,000 or more were not particularly wealthy. "I wouldn't say £150,000 was rich," argued 38-year-old financier Mark Smith. But there was real confusion about how many people are really eligible to pay the tax. Nick Morgan estimated that "up to 10 per cent" of the population were impacted by the tax rate: the actual figure is around 1 per cent.

And while the alleged impact on enterprise is a popular argument against the 50p tax, not all experts are convinced. Eileen Burbidge, a venture capital investor, doesn't think the young entrepreneurs she works with have any interest in the top rate of tax. "They're not in that high bracket, it doesn't affect them," she said. "They're more interested in whether there are people who want to support the kind of things they want to do." Getting to the level where the top rate of tax comes into force "would be a nice problem to have for most of them".

Anton Howes, a 21-year-old history student at King's College, is a self-described libertarian and founder of the anti-state youth movement, the Liberty League. His father works in wealth fund management in Kazakhstan and would be eligible for the tax if he lived in Britain, but Anton insists his own wealthy background has nothing to do with his own opposition. "I think the biggest problem isn't so much taxing those who are already rich," he said, "but taxing those people who are entrepreneurs who need a return on their investment." But for him the key issue isn't whether the tax brings in revenue, but rather the morality of the policy. "The opposition is not so much the tax itself; it's what it represents," he argues. "It represents a very big government, a very controlling government."

For 24-year-old Rob Leitch, who runs a charity and works part-time for a Conservative MP, opposition is less ideological. "When you look at any tax, you have to look at whether it's working in practice, and at the tax rate." If it was bringing in significant revenue, he would accept the tax "in these tough economic times", but it had "only brought in a fraction of what was predicted". There are indications that some of those eligible for the tax paid themselves far larger dividends than normal before the rate was imposed, making it difficult to judge its success after a year. "But you still get an indication if this is a tax that is working effectively, even if it be a slightly distorted one," he argued.

While most City workers were happy with the reduction in the top rate of tax, there was unease about Osborne's hiking of stamp duty on homes costing more than £2 million to 7 per cent. "Prices have risen in London, and if it includes houses worth £2m then people are going to be stung," suggested Tom Carey. And while Mark Smith suggested that the Government should "find ways of taxing assets instead of income", he remained vehemently opposed to any form of mansion tax.

But, overall, few in the Square Mile felt they had much to worry about from Osborne's Budget. "Many people are happy about the reduction in the top rate," as Adrian Thompson put it. "Whether it's fair is a matter of debate."

Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
News
i100
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
people
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

BI Developer - Sheffield - £35,000 ~ £40,000 DOE

£35000 - £40000 per annum + competitive: Progressive Recruitment: My client is...

Employment Solicitor

Highly Competitive Salary: Austen Lloyd: MANCHESTER - Senior Employment Solici...

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

Commercial Litigation Associate

Highly Attractive Package: Austen Lloyd: CITY - COMMERCIAL LITIGATION - GLOBAL...

Day In a Page

Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride