There have been calls from more than 500 business leaders to scrap the 50p top tax rate at next month’s Budget.
Chancellor George Osborne has been accused of putting “populist politics before sound economics” by the 537 SME business owners in a joint letter to the Daily Telegraph.
The letter stated, “Given the current state of the UK economy, we urge the chancellor to urgently consider scrapping the top rate of tax in his forthcoming Budget.
"The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.
"We believe the richest should help the poorest in society. 1% of taxpayers are forecast to contribute nearly 28% of income taxes.
"But penalising high earners through an unfair, politically-motivated tax puts populist politics before sound economics."
“The result is that the 50p tax is set to reduce government income and damage the economy, the public services and charitable giving."
It was also stated that the rate was a big disincentive to job creation and will reduce resources available for entrepreneurs to reinvest in businesses and consequentially promote growth.
The government responded to the claims by insisting the 50p tax rate is purely a temporary measure and that there is no timetable for changes in policy.