PM considering 50p tax rate rethink

David Cameron has indicated that the coalition Government could scrap the new 50p top rate of income tax if it proves to be counter-productive.

In an interview with The Daily Telegraph, the Prime Minister insisted that he was a "low-tax Conservative" through and through who instinctively disliked high marginal rates.

"I absolutely do believe in a lower tax country and I want to deliver lower marginal rates of tax. The problem is the appalling budget deficit. I am still a low-tax Conservative. Born one, lived one, will die one," he said.

His comments appeared designed to reassure traditional Tory supporters following a series of concessions to the Liberal Democrats in the coalition deal between the two parties.

A Tory pledge to raise the threshold for inheritance tax to £1 million has already been abandoned while the Conservatives also agreed to a hike in capital gains tax on non-business assets.

However Mr Cameron indicated that they could be prepared to look again at Labour's 50p top rate if - as some experts predict - the yields will be low as high earners avoided paying or left the country.

"We will always be looking at the yields from different taxes to see whether they are effective and efficient," he said.

"I have always had my doubts that 50p will yield a lot of money. But the great thing about being in office is we can give you the figures now. Let's have a look and see.

"We don't like high marginal rates of tax. They are not good for the country, but we always had a queue and the (front of) the queue is cutting tax for the low paid."