Post Office chair calls for higher rate of income tax on wealthy

Tim Parker says tax system is not redistributive enough and suggests 50p rate

Post Office boss Tim Parker says paying half of your salary in tax is ‘entirely fair’ for high-earners (PA)

Tim Parker, the tycoon recently appointed to chair the Post Office and National Trust, has launched a scathing attack on boardroom pay and called for income tax to be increased to 50 per cent on the wealthy.

Speaking just days after the Chancellor raised the higher-rate income tax threshold and cut the capital gains tax rate, Mr Parker told Management Today magazine that the fiscal system was not sufficiently progressive.

“A free-market system needs citizens to believe that the method of redistributing income is fair and effective. If you earn a lot, you should pay a lot in tax. At the moment you pay around 47 per cent, and it may be that this needs revisiting,” he said.

“There’s a perception that a small raft of executives are doing very well indeed, and that causes disquiet. Paying roughly half seems entirely fair to me.”

The current additional rate of tax for earnings above £150,000 is 45 per cent, which the Chancellor cut from 50 per cent in 2012.

The Institute for Fiscal Studies projected this week that the Chancellor’s Budget measures since the election would cut the incomes of the poorest fifth of households by between 10 per cent and 12 per cent by 2020 – with little net impact on the richest 20 per cent. And in their manifesto, the Conservatives said they would raise the 40p income tax rate threshold to £50,000 by 2020. As a step on the road to that goal, George Osborne has raised the threshold by £1,000 to £45,000 from April 2017.

Mr Parker’s own wealth is put at £185m by The Sunday Times Rich List. The businessman, nicknamed the “Prince of Darkness” during his time cutting jobs at Kwik-Fit and the AA for their private equity owners, also criticised directors’ pay at big, quoted companies. “You need to be aware of your reward relative to others who work in that organisation,” he added.

His comments chime with a growing sense among some business figures that corporate pay has lost touch with reality. Simon Walker, the director-general of the Institute of Directors, observed last year that “in some corners of corporate Britain, pay for top executives has become so divided from performance that it cannot be justified”. There has also been a spate of shareholder revolts in recent years over the scale of remuneration packages for senior executives.

A survey conducted last year by the High Pay Centre think-tank found that 52 per cent of the 1,000 business leaders surveyed felt that anger about senior levels of executive pay was a threat to public trust in business.

In his interview, Mr Parker, who was very briefly a deputy mayor of London under Boris Johnson, also condemned inherited wealth. He said it disrupted the market that the general population was asked to believe in, particularly in London and the South-east, where high property prices enrich homeowners and those who inherit from them.

He argued: “Is wealth yours when you die? Should assets stay with estates? It really surprises me how little discussion we have about this.”

Mr Parker, who has four children, added: “I want my children to benefit to a certain extent. But they must create their own lives.”