Chancellor says figures vindicate decision to reduce top rate of income tax, but Labour’s John McDonnell says data is distorted

George Osborne has said the tax take from Britain’s highest earners has increased by £8bn despite his reduction in the top rate of income tax.

The chancellor’s decision in 2012 to cut the 50p top rate for taxpayers earning more than £150,000 was regarded at the time as a political misjudgment. But he has always insisted that the 50p rate, introduced by Labour’s Alistair Darling as he struggled to shore up the public finances following the financial crisis, brought in little extra revenue.

Speaking in the Commons on Tuesday, Osborne said official figures confirmed that top taxpayers had paid more since the rate was cut.

“Numbers from HMRC, which for the first time show the income tax data for 2013-14 when the 50p rate was reduced to 45p, show that there was an £8bn increase in revenues from additional-rate taxpayers,” he said. “This completely defies the predictions and shows that what we have are lower, competitive taxes that are paid by all.”

But the shadow chancellor, John McDonnell, said the data was distorted by the fact that high earners, many of whom pay tax through the self-assessment system, were able to delay taking income until the cut in the top rate came into force.

McDonnell said: “No one seriously believes these fantasy figures from George Osborne. And it will come as no surprise that yet again this bankers’ chancellor is playing fast and loose with figures to justify his tax giveaways to a wealthy few.”

Facebook Twitter Pinterest John McDonnell speaking outside parliament on Tuesday. Photograph: Guy Bell/Rex/Shutterstock

He spoke at a rally outside parliament on Tuesday against staff cuts at HM Revenue and Customs, calling on the government to focus instead on trying to boost the tax take from big companies. “The last thing you do if you want to close the tax gap is close offices and cut staff,” he tweeted.

The data from HMRC, published on Monday, also showed that successive increases in the tax-free personal allowance – a policy first championed by the Liberal Democrats in the coalition government and then adopted and extended by the Conservatives – meant that the total number of taxpayers had fallen by 200,000.



Osborne said: “Under this government, the richest pay a higher proportion of income tax.”

He took the opportunity to have a dig at McDonnell’s decision to take advice from the former Greek finance minister Yanis Varoufakis and the journalist Paul Mason.

“Frankly, the fact that the Labour party is now getting its advice from Yanis Varoufakis and the revolutionary Marxist broadcaster Paul Mason does not suggest to me that they have got an answer to economic security. Presumably they chose those two because Chairman Mao was dead and Mickey Mouse was busy,” he said.

The chancellor is due to deliver his latest budget on 16 March, against the background of a fractious debate in the Tory party in the run-up to the EU referendum in June.

Osborne has already signalled that he could impose fresh departmental spending cuts to ensure that he meets his target of achieving a surplus on the public finances in the face of the deteriorating global economic outlook.

Speaking at a G20 finance ministers meeting at the weekend, Osborne said the environment had become “markedly worse” and may require further reductions in spending, which he would address in the budget.

• This article was amended on 2 March 2016. It previously stated John McDonnell had hired Yanis Varoufakis and Paul Mason. This has been corrected.