Treasury Select Committee queries George Osborne's Budget estimates
Wednesday 18 April 2012
Estimates used by George Osborne to justify the axing of the 50p
top tax rate are "highly uncertain", an influential group of MPs warned
The Treasury Select Committee said the cost of reducing the level to 45p "could be significantly more or less" than the £110 million cited by the Chancellor.
It also urged the Government to offset the pain quantitative easing is causing savers, and suggested that ministers had so far failed to make the case for capping tax relief on charitable donations.
The conclusions came in the MPs' report into last month's Budget.
Referring to the controversial decision to reduce the levy on earnings above £150,000, the committee said: "The cost and benefits of reducing the additional tax rate to 45p are both highly uncertain, and could be significantly more or less than the cost included in the Budget. We recommend that HM Revenue & Customs publish in due course a comprehensive assessment of the effect on the Exchequer of the new 45p rate."
The MPs also said more information was needed on the effects of the £325 billion of new money effectively "printed" by the Bank of England.
"Loose monetary policy, achieved through quantitative easing and low interest rates, has redistributional effects, particularly penalising savers, those with 'drawdown pensions' and those retiring now," the report said.
"The Bank of England has argued that some of those effects may be mitigated by the increase in asset prices stimulated by quantitative easing.
"While the aggregate of savers and pensioners may have received some benefit from higher asset prices, there will be many individuals who will not have benefited.
"The Bank of England, after, where appropriate, consultation with the Treasury, should provide its estimate of the overall benefit and loss to pensioners and savers from quantitative easing."
The document went on: "We recommend that the Government consider whether there are any measures that should be taken to mitigate the redistributional effects of quantitative easing, and if appropriate consult on them at the time of the Autumn Statement."
The committee cautioned that easing the impact of cutting child benefit from families with higher incomes would complicate the tax code and did not address all objections to the policy.
It also insisted ministers should offer a "more detailed explanation" of proposals for cutting tax relief on charitable donations.
"We recommend that the Treasury soon ask HMRC to make an assessment and publish the impact of the cap on income tax reliefs, both on business investment and charities. A more detailed explanation of the problem the cap seeks to address is needed, along with consideration of other possible means of dealing with it as the Red Book proposes."
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
£30000 - £35000 per annum + pension + holidays: The Jenrick Group: Electrical ...
Negotiable: Recruitment Genius: This company offers London's best photo booth ...
£25000 - £30000 per annum: Recruitment Genius: Domestic Gas Service Engineers ...
£50000 per annum: Recruitment Genius: This is an incredible opportunity for a ...