ANDREW LLOYD WEBBER: The last thing this country needs is a pirate raid on the wealth creators who still dare navigate our stormy waters
(...And don't lynch me as a rich b*****d flying a kite for his own cause - I really fear an exodus of talent)
By Andrew Lloyd Webber
Last updated at 12:31 AM on 26th April 2009
Fearful: Andrew Lloyd Webber says an exodus of talent is inevitable
The opinion polls have uttered. The country loves the new 50 per cent top rate of income tax. Soak the rich. Smash the bankers. So Government spin doctors are in second heaven. The Conservatives' silence redefines a tomb. And I suppose there'd be quite a turnout for the public flogging of Sir Fred the Shred.
But before you book your tickets, hold hard. And before you lynch me as a rich b*****d flying a kite for my own cause, let me beg you to believe that I am not.
I believe that this new top rate of tax could be the final nail in the coffin of Britain plc.
I am 61 years old. I have lived and worked in Britain all my life. Not even in the dark days of penal Labour taxation in the Seventies did I have any intention of leaving the country of my birth.
Despite a rumour put around some years back, I have never contemplated leaving Britain for tax reasons. But in the 40-plus years I have been lucky enough to work here, I've seen a bit. So I must draw your attention to what is really proposed in this Budget.
Here's the truth. The proposed top rate of income tax is not 50 per cent. It is 50 per cent plus 1.5 per cent national insurance paid by employees plus 13.3 per cent paid by employers. That's not 50 per cent. Two years from now, Britain will have the highest tax rate on earned income of any developed country.
I write this article because I fear the inevitable exodus of the talent that can dig us out of the hole we find ourselves in. It is inevitable, given that other countries are bidding for entrepreneurs. The Government must modify its proposals.
I give you this example. I have altered the details of the family I write about for obvious reasons. But the essentials are true.
Last Thursday I met with a thirtysomething guy. I absolutely depend on him in a highly technical area of theatrical production. For legal reasons he has to employ himself through his own company. Under the new tax regime, he will have to pay 13.3 per cent to employ himself before he pays himself anything. And then he will have to pay 51.5 per cent on what's left.
This is a guy at the cutting edge of his profession who works all over the world. He is in demand in every major territory where entertainment is produced. He has a young wife and two children. Last Thursday he told me that he and his wife had decided that the UK was no longer where they wanted to live.
His wife thinks the State education system is inadequate. And she fears that a bankrupt Britain will increasingly be a worse place in which to live as the horror of our present financial mess hits us all in the solar plexus.
He says that he is young enough to set up shop somewhere else. The new tax rates were the final straw. These talented young people know they will make it impossible for them to educate their kids privately in the UK.
So Britain plc loses not just the 40 per cent he would have paid in personal taxes under the old regime - plus NI and everything else - but... Come on, I don't need to explain the knock-on effect. It's obviously huge and immensely damaging - that's why I am writing this article quickly and probably with too much passion.
The extraordinary thing is that, back in 1974, even Denis 'squeeze the rich until the pips squeak' Healey realised that you can't crush these talented people - who work much of the year abroad and away from their families - like specimen butterflies.
He introduced a reduction in tax of 25 per cent for any work performed by a UK resident overseas. This, amazingly, rose to 100 per cent if the work took the individual out of the UK for a year. These reductions were scrapped by the Tories when they introduced the 40 per cent top rate.
In the Healey days, there was no open-ended national insurance tax. Then national insurance was supposed to be just that, not the gigantic Ponzi scheme financed through direct taxation that it has become.
Of course there are thousands of people like my friend - some employing themselves through their own companies, some self-employed, some employed by others. But all are part of the wealth-creation engine that has helped power Britain's economy.
There is another dangerous aspect to the proposed tax climate. I am grateful to the distinguished crossbench peer who pointed it out to me. That is the wide disparity between the capital gains tax (CGT) rate at 18 per cent and the new top rate of income tax, which is effectively three times as much.
So it's far more rewarding to keep 82 per cent of that clever speculation you did in the property market than bust your guts creating real wealth.
Yes, it's laudable to have a CGT rate that encourages the creation of new enterprises. But it does not help Britain if the top rate of income tax is so high that the system actively encourages speculation, and therefore the repetition of the mess that we find ourselves in today.
So I ask the Government to reconsider what it is doing. More than ever before we need to keep high-flying professionals in the UK. We can't, as we have done in the past, dump on them through penal personal taxation.
Of course we know that there have been some shocking excesses in the City of London. But for years we have also had drummed into us that the City of London proudly took over from manufacturing as the UK's main source of income.
New Labour rejoiced in the fruits of the excesses of the bankers.
Of course, with hindsight, their bonuses were obscene. But New Labour gratefully taxed them.
So, I beg readers not to confuse overpaid bankers with the rest of Britain's entrepreneurs.
The next few years are going to be horrendous in the UK. The last thing we need is a Somali pirate-style raid on the few wealth creators who still dare to navigate Britain's gale-force waters.