PBR 'could increase emigration rates'

Tax reforms set out by the upcoming Pre-Budget Report (PBR) could encourage UK emigration and boost the number of international money transfers.

Speaking to the Scotland on Sunday, an accountant pointed out that recent changes to income tax could have provoked some Britons to leave for preferable tax regimes overseas.

This could, in turn, have led to international payments to the UK becoming more common.

Chancellor of the exchequer Alistair Darling is widely anticipated to include tax increases in the PBR, which is to be delivered tomorrow (December 9th).

A need to patch up the deteriorating public finances - with over £175 billion of debts built up during 2009 - has provided impetus for the reforms.

In the Budget, delivered in April, Mr Darling announced that the higher rate of income tax for those earning £150,000 or more per year was to increase from 40 per cent to 50 per cent.

Similar increases could be imposed on other income tax bands by the PBR.

Derek Henderson, head of tax at Deloitte in Scotland, told the newspaper: "Increasing income tax on the higher paid looks counter-productive. The Treasury believes that it will collect just 30 per cent of the theoretical yield from the 50 per cent rate.

"Encouraging tax planning and emigration isn't a great economic strategy."

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Posted by Tom Papworth