The other proposal will raise more tax

People are working themselves into a later over the 45p tax rate for those earning over £150k per year. Experts have told us that it will raise comparatively little. Darling himself estimated last November that it would raise £670 million in 2011/12.

On today's Conservative Home website William Norton, a solicitor and adviser on taxation policy to the Conservatives, assures us that about 500,000 people will be liable, so on average they will pay £1,340 each more tax. (It implies that their average income is £176,800 per annum, implying that the distribution of income is skewed very much to the 150,00-200,000 range of incomes.

Norton's article is worth reading if only because another increased tax proposal had been slipped in with less fanfare and debate. This is for everyone earning in excess of £100,00. Their personal tax allowances will be reduced by £1 for every £2 earned, until half of the allowance is lost. For those earning over £140,000 taxpayers will lose a further £1 in allowances for every £2 earned until the allowance has fully gone. In general all allowances will probably have been deleted by the time an income reaches £150,000, when the increased tax rate kicks in.

Less attention has been given to this second stealth tax, partly because it is more complicated - a typical Brownian wheeze. A rise of 5p in the pound from 40p or 12% increase in tax per taxable pound. This will obviously appeal to his left wingers, who have to be fed some raw meat from time to time.

In fact as Norton suggests there are legal loopholes which allow a tax payer to avoid all the depredation, if his benefits are otherwise than salary for anything over £100,000. He gives examples and notes that details are even published on the website of HMRC.

If the proposal comes into force, expect frantic complicated attempts to close loopholes!