Leading article: Economic growth must come first

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When Alistair Darling introduced the 50p tax rate in 2009 it was billed as a temporary measure – a fair way to spread the pain of Britain's unmanageable debts by leaning on those with what the then Chancellor described as "the broadest shoulders". Two years on, with double-dip recession a very real threat, it is time for the top rate to go.

In terms of revenue-raising, the impact on the Exchequer is minimal. The controversial marginal rate – which is levied on earnings above £150,000 – hits just 320,000 people. Out of this year's total income tax take of around £150bn, it is expected to generate at most £2.7bn. And even that may be optimistic, with some experts predicting that as much as two-thirds of the total could be lost to avoidance.

But while the 50p rate is of limited fiscal impact, it has considerable symbolic significance. A top rate that takes half of every £1 earned for the taxman is a signal against wealth creation, penalising precisely the dynamic, entrepreneurial types that the economy so desperately needs.

Mr Darling's Budget came when the expectation was still of a relatively swift recovery from recession. In fact, the economy is flat-lining. Britain's GDP expanded by a woeful 0.2 per cent in the second quarter. The outlook is darkening, with a slew of indicators on everything from high-street spending to manufacturing output pointing bleakly downwards.

In such a climate, the message that wealth distribution is considered more important than wealth creation is one that Britain cannot afford to send. As the 20 economists who wrote to the Financial Times yesterday point out, there is a real danger of "lasting damage" to the economy if the country cannot compete internationally for foreign investment and high earners.

That said, to call for the demise of the top tax band is not to say that the most well-off should not contribute a proportionally higher share to society. But there are better ways of doing it that may also raise more money, such as using a so-called "mansion tax" to target unearned wealth rather than high earning capacity. In the case of the 50p rate, temporary should mean temporary.

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