George Osborne has refused to embrace the language of a ‘tycoon tax’ and the phrase will not appear in tomorrow’s Budget, in a snub to the Liberal Democrats.
An ally of the Chancellor said that tomorrow’s Budget is designed to promote enterprise and therefore such language is inappropriate.
The move appears to be a rather stark snub to the Liberal Democrats, who floated the idea less than two weeks ago at their Spring Conference.
Lib Dems told The Times that they were surprised at the claim.
Reports this morning suggest the Lib Dems may be left trying to brand some of the anti-avoidance measures as amounting to a tycoon tax.
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Senior figures said Mr Osborne would call the policy an extension of the benefit cap - but for the most wealthy.
During the day there was an 11th hour bid by Liberal Democrats to have the phrase ‘Tycoon Tax’ reinstated in the Chancellor’ speech.
A source said Mr Osborne did not like the language, but it was one way of ensuring recognition for the policy.
Last week the Lib Dems were briefing they were heading for a major win on the issue in the Budget.
Initially, the Lib Dems suggested that a tycoon tax, which they claimed was seriously be considered for this budget, amounted to a minimum amount of tax they would force high earning individuals to pay.
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Then, last week, it emerged the phrase referred to a new idea - a ceiling of the amount of allowances and loopholes which high earning individuals could offset against tax.
The rejection of the ‘tycoon tax’ emerged as Labour indicated it will not make a commitment to reinstate the 50p top rate of tax when it is abolished in tomorrow’s Budget.
Ed Balls, the Shadow Chancellor, will say that the Government is making the wrong decision cutting from 50p to 45p the income tax rate for those earning more than £150,000 from April 2013.
However he will also say that it is too early to make decisions about the next manifesto, in an apparent softening of Ed Miliband’s strong personal commitment to keeping the 50p top rate of tax.
It remained unclear how strongly Mr Osborne will signal the abolition of the £150,000 top rate altogether. At Monday’s Quad meeting – comprising the key coalition figures of David Cameron, Nick Clegg, Mr Osborne and Danny Alexander - the Chancellor did not argue that the tax should be scrapped.
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This prompted some Lib Dems to speculate they were backing away from abolishing the higher rate of tax altogether, for earners over £150,000
However one ally said the Chancellor “has already decided the language he will use” over a future 40p top rate of tax, suggesting the Lib Dems may just have been cut out of the loop.