LONDON - Despite the fact that a reduction in the overall national debt is deemed as its top priority, the British government vows to keep the country as an attractive tax environment for the wealthy.
Prime Minister David Cameron recently made an open bid for French millionaires to move to London.
So, unlike other countries where the current tendency is to increase taxes on the wealthy, the process has gone into reverse in Britain: the so-called "additional rate" of 50 per cent income tax imposed on people earning above ?150,000 (S$284,000) yearly will be reduced to 45 per cent from April.
As Mr George Osborne, the British finance minister, told Parliament, "high top rates of tax risk damaging the UK's economy in the longer term".
A new Budget will be introduced later this month, but it is expected that high incomes which remain below the ?150,000 threshold will attract a top rate of 40 per cent tax.
This may seem like one of the most moderate top rates in Europe, but the particular feature of the British system is that this tax band hits a large number of people: those with an annual income of just ?34,500 already fall into the "wealthy" category.
Uniquely, therefore, the biggest taxation battle in Britain today is not about the top earners, but about the poorer members of society, who currently pay 20 per cent on any yearly income above ?10,000.
The opposition Labour Party is promising that, if returned to power, it will introduce a 10 per cent rate as the lowest tax band.