City experts warned tonight that top earners could leave Britain to avoid Labour's new 50 per cent tax on the rich.
Alistair Darling sparked fears of a 'brain drain' with a shock increase in the top income tax rate in a Budget harking back to Old Labour today.
He revealed measures aimed at punishing high earners in a bid to drag Britain out of the worst recession since the Second World War.
Westminster was stunned as he outlined a new 50 per cent tax band for those earning more than £150,000 which will come into force next year.And the inevitable response...
The City immediately responded with fears highly-skilled staff on top salaries will simply move abroad to avoid paying more tax, in a blow to UK industry.
Stuart Fraser, policy chairman of the City of London Corporation, claimed the measures would put the Square Mile at a disadvantage compared to other countries.
'The new top rate of income tax at 50 per cent may damage the City's competitiveness - we operate in a global market for talent, and that talent is expensive,' he said.Who would blame them? And the City experts aren't the only ones warning of the tax increase resulting in lowered tax revenues.
The IFS said: ‘The Government’s plans to raise income tax rates for people on incomes above £150,000 are very unlikely to raise the revenue that it has predicted, and indeed more likely to reduce revenue overall’.