Over 2 million middle-class workers in the UK would qualify for a £2,000 reduction in their annual income tax contributions if a radical overhaul of the tax system was instigated, a Conservative pressure group has argued.
Renewal, have suggested that the government consider abandoning their plans to bring the top tax bracket down to 40%, and instead retain the current 45% rate. The major difference in the existing system and Renewalís proposal is that the top rate would apply to annual incomes over £62,000, rather than the vastly higher current level of £150,000.
Renewalís suggestions are the latest in an ongoing debate within the Conservative contingency about how the party can capture the attention and votes of middle class, average earners who would likely be detracted if the government chose to reduce the top bracket to 40%.
Despite being a pressure group in name, Renewal is thought to yield significant influence within the Tory party and is strongly supported by prominent and powerful backbencher Robert Halfon. Previously, their proposals contributed heavily to Chancellor George Osborne publically announcing Tory support for raising the minimum wage at a rate higher than inflation, and it is thought that their latest suggestions are aimed at bolstering Tory allure to voters outside the city and South.
There has been a growing sentiment within the Tory party that they must act now in order to capture the middle class vote, and it is widely believed that a high quantity of party members have privately urged Mr Osborne to implement policy that attracts ësqueezed middleí, voters with salaries between £40,000 and £60,000.
Indeed, the middle class have thus far been the most adversely affected by the coalition governmentís taxation policy, as they have persistently decreased the threshold that workers pay the 40% tax rate. Whilst their subsequent increase of the personal allowance has benefitted lower earners, the middle class have had their wages consistently ësqueezedí by the coalitions commitment to raising disposable income levels with the working class.
Renewal head David Skelton, has urged the government to seriously consider his groupís recent proposals, citing that attracting middle earning voters who are currently feeling the squeeze through tax cuts is essential to the partyís success in the upcoming 2015 General Election.
ìMore and more people on middle incomes have been dragged into paying the 40 per cent rate of tax over the past decade or so. That includes teachers, nurses, bricklayers, police officers and Tube drivers,î Mr Skelton said.
ìThese are not the type of people who should be paying higher-rate tax.î
Mr Skelton identified that only those who have an annual income of over £85,000 would be detrimentally affected, but argued that this would be the best manner to ensure a more wealthy society as a whole.
Mr Skelton said that only workers on more than £85,000 would be worse off under the new system.
ìSomeone has to pay and it is those who are very well off who will do so in this proposal,î he said. ì
ìThe very richest would pay a little more and the majority of working people would benefit, some of them considerably.î
Higher tax bracket Vs personal allowance
Thus far, the current Tory administration have pursued a different route to try and attract middle class voters, opting to consistently raise the personal allowance that tax payers are entitled to on an annual basis so that middle earning ësqueezedí workers have a higher level of disposable income.
It is thought that Mr Osborne will announce a rise in the current personal allowance to £10,500, up from the current £10,000 for basic tax, in a move that would cost the Treasury £1 billion. If this manifests in reality, then the likelihood of Renewalís proposals being implemented will diminish immeasurably, though this will do little to help the Conservatives chances of capturing the middle class vote, as it will suggest that they are again protecting the countryís richest and most affluent.
The driving force behind the personal allowance rise is said to be the Liberal Democrats and their Chief Secretary to the Treasury Danny Alexander. Mr Alexander has argued that in recent times that whilst he is fully aware of the merits of not implementing a 40% top tax bracket, that nevertheless the working class low earners must be put first, and this can only be done through an increase in the personal allowance.
ìI think itís right that we have a policy that is focused particularly at that part of the populationî, Mr Alexander said.