Darling defends tax on high earners

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Those with the "broadest shoulders" have to take some of the strain of the economic downturn, chancellor Alistair Darling said today.

Darling defended the decision to increase tax for high earners in a speech to the annual convention of the Institute of Directors.

"Difficult decisions" have had to be made by the government to tackle the recession, the chancellor said.

But he said to ensure that Britons "aspire to do well as they can", the government had been forced to make some drastic moves to balance public finances.

Darling has faced harsh criticism after introducing a new 50 pence rate of income tax for those earning over £150,000.

But he told 2,500 directors at the one-day conference in London: "I want to ensure that people inside this country can aspire to do as well as they can for themselves and their families - people want to ensure that if they do a hard day's work, they get a reward for it.

"I want people from outside Britain to continue to invest in this country and to see this country as a good place to do business.

"But sometimes, and every government in the world is going to be confronted by this, you do need to make difficult decisions.

"And frankly I think it is fair to ask those with the broadest shoulders to shoulder some of the strain because every one of us, at the end of the day, has an interest in making sure that as a country we have sustainable public finances in the medium and in the long term."

The chancellor also stressed the need to ensure that public finances are "sustainable".

"We have tried to chart our way through some of the difficult waters and I believe there are tremendous opportunities for every one of us," Darling said.

"I remain confident that we will come through this and our economy will start to grow. World trade is expected to double in the next 20 years and I believe we do have a good future but you and the government need to work together to get through a difficult time."

And Darling stressed that raising tax had been "necessary" in the current financial situation.

"I want to ensure that people can aspire to do as well as they can for themselves and their families and I want people from outside Britain to continue to invest in this country," he explained.

"But sometimes we need to make difficult decisions. No chancellor wants to raise taxes if he can avoid it and I don't tax for the sake of it, but in a situation like this it is necessary to raise revenue."

TUC general secretary Brendan Barber responded: "Making the very rich pay a little more was the most popular part of the Budget. The country now faces a big bill for paying the costs of the financial crisis largely caused by top bankers.

"Britain's directors run the risk of looking pretty selfish if they are saying that those who did best out of the bubble should pay no more, while thousands of low-paid public servants should have their pay frozen."