British chancellor may propose tax cut

The British chancellor of the exchequer is negotiating a cut in the top tax rate while closing loopholes to satisfy the Liberal Democrats, sources say. George Osborne wants to cut the top rate from 50 percent to 45 percent, the Financial Times reported, citing sources "familiar with the budget negotiations." The cut would be combined with measures to ensure the richest taxpayers pay a minimum, the so-called tycoon tax suggested by Deputy Prime Minister Nick Clegg, leader of the Conservatives' Liberal Democrat partners, at his party conference last week. Osborne is to announce his proposed budget next week. The final decision on the tax plan is to be made at a meeting Monday, the Financial Times said. While polls show about 60 percent of British voters support a top tax rate of 50 percent, Conservatives say it discourages entrepreneurs and convinces the richest residents to leave the country. David Ruffley, a Conservative member of Parliament who sits on the Treasury select committee, said taxpayers also avoid tax by "turning income into capital." "The 50 percent rate says Britain is not open for business and will stop entrepreneurs coming here in the first place," he said.