Mayor calls for London to keep tax

London mayor Boris Johnson is calling for London to have the right to keep more of its tax revenues.

A high percentage of top tax rate payers – who were previously forking out for the 50 per cent tax and are now being hit with the 45 per cent tax rate – live in the capital city. Mr Johnson believes that these people should not be such a "cash cow" for the rest of the country.

His claims have some foundation. According to Evening Standard, some claim that one pound in five earned in London goes to subsidise the regions, while others suggest that the figure is substantially higher. Indeed, business lobby group London First believes that the net tax outflow from London to the rest of the UK comes in as much as £20 billion a year.

The city is 45 per cent more productive than other parts of the country, while its living costs are much higher. But while there is certainly a case for altering the outbound flow of tax money from London, doing so is fraught with issues and would inevitably cause problems for the poorer areas of the country.