Since the beginning of time it seems there has always been a battle between the ‘have’s’ and ‘have not’s’ and it is no different today than it has ever been. At the centre of controversy is the pension tax relief in which the top earners get huge breaks whilst small and medium earners continue paying the regulated amount.
This year alone it is estimated that the top earners will be saving at least £1 billion in total on pension taxes. As a result of these inequalities, there pressure on George Osborne is increasing to cut tax relief on those top earners in his upcoming budget. The top 1% who make more than £150,000 would be responsible for that £1 billion tax relief and the next bracket down, those who make more than £75,000 will save double that amount.
In total, that would have been £3 billion which could have gone to government programmes and there are growing numbers of taxpayers and liberal democrats who feel that the Chancellor should reduce the relief being offered to those top earners. This group, the top 1% is going to claim as much as 15% of the relief offered by government, which is of course 15 times higher than their fair share. It is this inequality that is coming under fire.
This group avoids paying the 50% taxes on their pension funds whilst lower wage earners pay anywhere from 20% to 40% after tax relief. As well as cutting the pension taxes for the top earners, it has been championed that a mansion tax be instituted for properties valued over £2 billion. Unfortunately, many believe this will have little effect since government will probably earmark those funds for top earners and not bottom and middle earners as it should be.
