Page last updated at 11:08 GMT, Saturday, 21 March 2009

Tax rise hard to avoid - Osborne

George Osborne

Increasing income tax for top-earners to 45% would be "difficult to avoid" for any future Tory government, Shadow chancellor George Osborne has admitted.

The government plans to raise the top rate for people earning more than £150,000 from 2011.

The Conservative Mayor of London Boris Johnson said on Friday that the move would stifle British enterprise.

But Mr Osborne told BBC Radio 4's Today programme that he had never - and could not - rule out tax rises by his party.

"If you look at the proposal to increase the rate of tax on people earning over £150,000 to the new 45% rate, that's going to be difficult to avoid."

His comments came after party leader David Cameron said in a speech on Thursday that the rich would have to pay their "fair share" to rescue the economy.

It is a deterrent to enterprise
Boris Johnson

Mr Osborne said his party would propose changes to the tax system so that companies relied on equity rather than debt and to encourage the public to save more.

He criticised Labour's management of the national finances and said the Conservatives would rein in public spending.

Mr Johnson had warned that "clobbering the rich" would be bad for business and that City institutions would suffer.

Speaking on BBC Radio 4's Any Questions?, he said: "It sends out a signal to people who create wealth, people who are energetic... can generate new industries or drive large enterprises of one kind or another... that we want to take more of their proceeds away than before.

"It is a deterrent to enterprise."

Lib Dem Treasury spokesman Vince Cable has said high earners will simply avoid the high rate by declaring income as capital gains, taxed at 18%. He has called for a shake-up to make the tax system fairer.

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