The top 1.5 % of earners in the UK will pay about half of the additional income tax collected by the government, a record high of £20bn ($25.21), over the next five years.
According to the latest analysis by the Office for Budget Responsibility, about 470,000 people who earn over £150,000 a year will contribute to the £20bn figure. The OBR is an advisory body established by the UK government to provide independent economic forecasts and analysis of the public finances.
The advisory body added that just 0.75% of earners were paying the additional 45 percent tax rate in 2010. The number has now moved up to 1.1% as of today and is expected to further rise to 1.5% by 2021, reports The Telegraph.
The increase is due to successive Chancellors freezing the threshold, OBR said. In five years from now, there will be more people in the country that pay zero tax on their income than those who pay the top rate. The additional tax rate might lead to high earners shifting their earnings into incorporated companies to avoid paying taxes. OBR estimates that the UK Government could end up losing more than £3bn in tax collections.
Jacob Rees-Mogg, a Treasury committee member was cited by the Telegraph as saying, "If you have very high tax rates then people inevitably take steps to limit the amount of tax they pay.
"If you're dependent on under 500,000 people that is a very narrow tax base and it indicates that rates at the top end have become too high and I think one of the things the Chancellor needs to look at is a fundamental overhaul of taxation," he added.
Senior Conservative MPs on the Treasury select committee have called on Chancellor Philip Hammond to strengthen the tax system. One such Conservative MP is Steve Baker. He said, "It's pretty obvious that we need to be careful to ensure the tax system is resilient and that means the burden of taxation is spread widely.
"This is symptomatic of a profound crisis of political economy that not just the UK but much of the world faces...Everywhere governments are struggling to fulfill promises that have been made and struggling to raise tax revenues to meet those promises and ultimately a range of places are resorting to highly expansionist monetary policy to cover the gap. This cannot go on," he added.