It's not something that could necessarily work in the US because taxes (of this kind) are done at a state level but it's an interesting idea. Over here we've noticed nervous sellers already and in general people are cutting back on holiday spending. With the crisis we're in a tough spot in that we need people to save money to help keep cash in banks but at the same time, our economies rely on spending and lots of it. A massive dry spell of shopping is not going to help so maybe somewhere in the middle isn't such a bad idea. Cutting a few points is not going to bring the end to the tax revenue stream but might help during this very rough patch.
Plans to raise the top rate of income tax for high earners from 40p to 45p in the pound will be announced today as Gordon Brown makes a decisive break with the policies of the Blair era.
In his crucial mini-Budget, the Chancellor Alistair Darling will say that the higher rate would be introduced after the next general election – so as not to break Labour's manifesto pledges since 1997 not to raise income tax rates. The proposed new top rate is expected to apply on incomes above £150,000.
Mr Darling will that "fair" tax increases will be needed to bring the public finances back into balance in the medium term.
He will disclose that government borrowing will rocket to almost £200bn over the next two years to fund an £18bn "fiscal stimulus" – including tax cuts – designed to ensure a "short and shallow" recession.
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