Tycoon Tax 'Unworkable' Says Tory Deputy Chairman Michael Fallon

Tycoon Tax 'Unworkable', Claims Senior Tory

Deputy Prime Minister Nick Clegg's plans for a "tycoon tax" on the super-wealthy are likely to be unworkable, according to a senior Tory.

Mr Clegg's proposal for a minimum floor on the percentage of overall income paid by the wealthiest was challenged by some Liberal Democrats over the weekend, with former Treasury spokesman Lord Oakeshott - a close ally of Business Secretary Vince Cable - describing it as a "superficially attractive measure that falls apart under scrutiny".

On Monday lunchtime Conservative deputy chairman Michael Fallon said he did not believe that either the tycoon tax or the mansion tax on properties worth more than £2 million favoured by Mr Cable would work.

Mr Fallon told BBC Radio 4's The World At One: "There is no point people coming forward with tycoon taxes or mansion taxes or anything else unless they actually do the work and show that these taxes would be practical - that they would yield the money in practice and that they would not be easily evadable."

Asked if he thought Mr Clegg's proposal would be "workable", Mr Fallon replied: "I would be very surprised. Very few other countries have what is called a tycoon tax."

Citing the study being carried out by HM Revenue and Customs, and due to be published next week, on how much money is raised by the 50p top rate of income tax, Mr Fallon said: "I think the best way to look at this is to look at the individual rates and see what they actually bring in."

However it seems unlikely that George Osborne will want to cut the 50p rate of tax for the highest earners without providing the Lib Dems with some form of revenue on the wealthy in return.

There were reports in the Sunday papers that Vince Cable and Nick Clegg were divided over a new tax for the rich - with Cable favouring a "mansion tax" on big properties, while Clegg has been touting his new tycoon tax idea over the weekend. Many conservatives also feel the mansion tax is unworkable.

Speaking to the Daily Telegraph at the weekend, Mr Clegg explained the thinking behind the tycoon tax proposal.

"There are hundreds of people earning millions per year who are barely paying 20% tax," said the Deputy Prime Minister.

"Forget 40%, forget 50%, forget 30%. They are not even paying 20%. Therefore, I think it's time that we look at what I call a tycoon tax.

"If you're earning millions per year, if you're able to pay an army of lawyers and accountants to basically pick and choose what tax you are paying, if you are paying as low as 25%, 20% or even less in tax, there should be a minimum fair share that you should pay to society.

"It makes people so incredibly angry when you are getting up early in the morning, working really hard to try and do the right thing for your family and for your community, you are paying your taxes and then you see people literally in a different galaxy who are paying extraordinarily low rates of tax."

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