There has been a great deal of controversy of late in regards to what should be done about top earners in the UK finding ways to avoid paying their fair share of taxes. Since it was found that most of the top earners in the UK have been paying equal or less than the amount paid by the average workers, government has been looking at the problem as it has lost literally billions in taxes.
At the moment, there is some amount of speculation on what the Chancellor’s Budget will be on Wednesday, and now it appears as though there will be another delay on a decision. Because of this, the Telegraph reports that these high income brackets will begin deferring income until 2013 as well as deferring dividends and bonuses until that time.
Experts are saying that the Chancellor should take immediate action instead of announcing plans for a tax cut that won’t be effective until next year. If he were to put the reduction in taxes into effect immediately, the government wouldn’t be losing out on revenue as these top earners would file now rather than deferring until next year.
It would be absolutely legal for these top earners to defer income whilst the Chancellor is delaying the decrease in their taxes. According to Hargreaves Landsdown’s chief executive, Ian Gorham, a good deal of those paying 50% would file if the taxes were lowered immediately to 45% and the UK wouldn’t be missing out on the money they would spend as a result of that income. If they defer it until 2013, many big spenders would not be sinking money into the economy.
Then, if the Chancellor announces plans to further reduce taxes for those same top earners to 40% before the next election, Gorham believes they will defer income even longer. This will not be good for the economy, in his eyes, and he maintains that the only action Mr. Osborne can take is an immediate reduction for the top earners.
