Brown defends top rate tax rise

Gordon Brown says he wishes he did not have to raise taxes

Prime Minister Gordon Brown has defended the new 50p tax rate for top earners, calling it a necessary step to address the growing deficit.

Mr Brown was addressing business leaders at the Confederation of British Industry (CBI) annual dinner.

CBI president Martin Broughton said the new tax on those earning more than £150,000 unveiled in last month's Budget was "economic vandalism".

Mr Brown also said the economy was resilient and would weather the storm.

Mr Broughton said the tax take from the new rate would be minimal and that the government had failed to address the UK's growing budget deficit.

Instead of raising income tax, Mr Broughton urged the government to focus on core services and cut back on non-essential ones.

Borrowing is expected to jump to about 12% of economic output from about 6% currently as the government tries to spend its way out of recession.

'Regret'

The prime minister said that the government had a duty to stimulate the economy and he said that the UK's debt burden would not fall until the economy began growing again.

He said the government had a 10-year plan to bring public finances back to a sustainable level and that the top rate tax increase was part of that.

"I regret the fact that in our plan for sustainable public finances, which includes very substantial efficiency savings in the public services, we have also had to take decisions on taxation," he said.

"It is not my desire or my wish, or the chancellor's desire or wish, to raise the top rate of tax. That is not something that we wanted to do."

Mr Brown's speech comes after the UK won praise from the IMF for its bold response to the recession.