"Income tax hits 'ordinary workers in south-east'"

Ben Weenen on top form at The Institute of Directors:

The tax needs armies of bureaucrats to administer and destabilises the job market, says IoD Director General Simon Walker.

The so-called income tax – favoured by some opposition politicians – is wrongly directed and amounts to a tax on Britain’s south-east. This is where 80 per cent of the high income earners affected are located and which pays more than its share of government outgoings already.

The tax isn’t just targeted at incomes earned by rich foreigners and overpaid bankers. Most of those who are hit are ordinary workers whose earnings have dropped in real terms over recent decades through no fault of their own but as a result of successive government policies.

According to Treasury estimates, the £160bn targeted from such a tax would means an average annual charge of £5,500 for workers affected (rising to over £100,000 a year for London's highest earners). The madness of London wages means that the tax is demanded from workers earning as little as £10,000 a year, barely a living wage in London and has led to a massive destabilisation in the jobs market.

Motivation for the tax – a populist gesture aimed at punishing the poor – was signposted by a Tory Treasury spokesman who claimed that for the 55 per cent of people who do not have a job, this is a popular policy.

Income tax requires armies of bureaucrats and accountants to administer, and artificially encourages cash in hand and avoidance – a windfall for lawyers and tax advisors.

UK income taxes are already higher than in all the other OECD countries, with well paid jobs also subject to National Insurance. More determinedly enterprising Countries such as Hong Kong and Singapore have far lower taxes on incomes, preferring property taxes instead. In Hong Kong, 45% of all revenues come from property.

Politicians may be hoping to prove the adage that if they rob Peter to pay Paul, they can count on Paul’s vote. But governments are elected to govern fairly for all. A populist tax directed at hard-working individuals because they’re easy targets negates fairness and delegitimises the system.

Imposing Income Tax is madness. It costs millions of jobs and shrinks the economy. This flies in the face of the Conservative Party being pro-work, and pro-enterprise. This measure to shift the burden of taxation away from rents and monopolies onto work and profits only rewards rent seekers and monopolists.

As the Director General of the IOD I can without equivocation condemn this nakedly anti-business policy."