FT.com / UK - TUC seeks tax relief cuts for the wealthy.

The chancellor could raise £10bn a year by capping the amount of tax relief that can be claimed by those earning more than £100,000 a year at £5,000, Brendan Barber, Trades Union Congress general secretary, said yesterday.

The move, he believes, would make a significant contribution to reducing the fiscal deficit.

Mr Barber said Britain's economy was still too fragile to start cutting the deficit, but when the time came to do so, it would be unfair to make those who did the least to cause the financial crisis pay the price.

The TUC argues that rather than cutting public services or raising taxes that hit poorer families - such as value-added tax - the government should repair the public finances by making those who did best from the boom pay a fairer share of tax.

The TUC says this should include a limit on the tax relief for those earning more than £100,000 a year.

TUC analysis shows 3.1 per cent of taxpayers receive 31 per cent of all tax relief, averaging £18,750 a year each. It says that, for those earning more than £100,000, the tax system is only mildly progressive.

After allowances, the effective tax rate on income for those earning between £100,000 and £150,000 is 27.1 per cent. It is 30.5 per cent for those earning between £150,000 and £200,000, and 31.8 per cent for those earning more than £200,000.

This should be the direction of travel announced t0day.

Disclosure: I advise the TUC on tax policy