George Osbourne, in his annual budget statement on Wednesday, stated that he was cutting the top rate of income tax from 50 pence in the pound to 45 pence by April 2013.
He argued that the original higher rate has not yielded as much as anticipated, partly as the rich were able to avoid tax.
Osborne tried to deflect criticism that any grand gestures are confined to the wealthy by announcing a huge hike in the level that Britons begin to pay tax to £9,205 pounds. The cost of this measure is going to cost the Treasury approximately £3.3 billion over 2013 and 2014.
A previous Labour government introduced the 50 pence tax rate in response to the sharp decline in the UK’s public finances following a banking crisis which led to the country’s deepest recession since World War II.
Osborne stressed that the rich ought to pay a larger proportion of their income than the poor. So he said he was offsetting the cut in the top rate by other taxes on wealth, such as, a new 7 percent charge on the sale of houses valued more than £2 million.
The majority of such properties are located in London.
Tony Ryland, a senior tax partner at London Chartered Accountants Blick Rothenberg, stated that these changes are going to a huge impact on the Londonhousing market, possibly driving away overseas buyers.
Milliband commented, “After today’s budget, millions will be paying more while millionaires pay less.”