Balls: changes will give wealthiest a £10,000 windfall

Top earners will be £10,000 better off from the Budget, shadow chancellor Ed Balls claimed today.

He said a Revenue & Customs review showed the cost of cutting the 50p rate to 45p would be

£3 billion in 2013/14, if the move did not prompt any behavioural change by taxpayers. The study had argued the cost would be far less because of £2.9 billion worth of “behavioural impact” — mainly rich people taking fewer measures to avoid the new, lower top rate.

This allowed George Osborne to claim the cost of moving to 45p would be only £100 million, if not less, and the highest earners would in fact pay more tax on average.

Mr Balls accused the Chancellor of taking a huge “gamble” on raking in cash from the 45p rate, higher stamp duty, closing tax loopholes and limiting tax reliefs. Attacking the “millionaire’s Budget”, Mr Balls said: “He’s hit pensioners but given to 300,000 people on incomes above £150,000 a £3 billion tax cut.... an average cut of £10,000.” Mr Osborne’s aides insisted his assumptions were backed by the independent Office for Budget Responsibility.

But OBR chairman Robert Chote highlighted “enormous uncertainties” around the estimates.