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The coalition government is to abandon plans to scrap the 50p top rate of tax despite rising pressure from business leaders.
The Prime Minister and George Osborne fear they will be accused of pandering to the wealthy if they scrap the rate, reports the Telegraph.
Business leaders and economists have put pessure on the coalition to abandon the 50p rate in recent months, arguing doing so will stimulate the economy.
But a report being prepared for the Chancellor by Her Majesty's Revenue and Customs is expected to show a "surge" in revenues totalling hundreds of millions of pounds from the first year - undermining the economic case for scrapping the levy.
Last year, more than 30 business leaders wrote to the Telegraph arguing the removal of the levy would help the economy and support employment.
The development follows plans announced yesterday by Cameron to crack down on executive pay.
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Match tax with tax breaks
Would it not be better to keep the 50% rate, or even push it up to 60%, but also offer more tax friendly investment vehicles, such as VCTS, that are specifically geared to ensuring capital is invested in industry and the infrastructure. This may ensure that there is money being directed to make money which is generally a good way to boost the economy.
Posted by: Glen McKeown