Boris demands tax ‘signal’

By staff

London mayor Boris Johnson has called for the abolition of the 50p rate and a cut in national insurance, in an unusually direct confrontation with David Cameron.

The Conservative mayor for London, who before the general election was the party's most senior figure in a position of power, said ministers needed to "look at" his proposal.

His comments follow figures yesterday suggesting Britain's economy slowed in the second quarter of 2011, registering growth in GDP of just 0.2%.

"You've got to look at ways of stimulating growth now, and certainly I think you should look at national insurance," Mr Johnson told the Telegraph newspaper.

"You should look at ways of stimulating consumption confidence in the market."

Although the coalition scrapped a planned increase in national insurance for basic rate taxpayers, it pushed through a one per cent hike in employer contributions and higher rate taxpayers.

Mr Johnson also suggested the 50p rate of income tax also needed to be scrapped, in order to send a "signal that London is open for business".

"That's the right direction to be going in," he added.

The London mayor timed his intervention effectively. Yesterday saw Mr Cameron insist that he was working well with chancellor George Osborne, after reports suggested divisions were developing between No 10 and No 11.

The Treasury is currently reporting to the prime minister about whether the 50p tax rate saves more money than it costs, in a move that could see the bracket wiped out in time for the next Budget.