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UK business leaders attack 50p tax rate proposal

High-profile business leaders in the U.K. have attacked plans by the country's main opposition party to reinstate a top rate of income tax if it came to power in 2015.

Twenty-four of the country's most senior business people warned on Sunday that the plan to re-introduce the 50p top tax rate for those earning over £150,000 ($247, 584) announced at the weekend by Ed Balls -- the shadow finance minister in the opposition Labour party – would be a "backward step," discourage business investment and would lead to job losses.

London, England.
Scott E. Barbour | Photodisc | Getty Images

In 2010, in an attempt to right its finances in the face of the global financial crisis, the then Labour government introduced the 50 percent tax rate for anyone earning more than £150,000. However the current coalition government cut it to 45 percent last April.

Among those attacking Labour's plans in a letter to The Daily Telegraph newspaper were business leaders including the chairman of online supermarket Ocado and chief executive of the footwear retailer Kurt Geiger. One prominent Labour party donor, Sir Richard Caring, was also among those criticising the move.

Another business leader and signatory said the center-left party's plans were "suicidal" and would trigger an exodus of investors like that seen in France after President François Hollande increased the top rate of tax to 75 percent on income earned over a million euros.

Balls defended the move Sunday morning, telling the BBC that the party was not anti-business and the 50p tax rate would only be a temporary measure as a way to reduce the budget deficit.

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"When you're talking about reducing the deficit, there are quite substantial cuts that are slated to come in after the next election, it just seems to me you need to be fair about this so that people with the broadest shoulders carry their fair share of the burden," Balls told the Andrew Marr Show on Sunday.

On Monday, Prime Minister David Cameron rebuffed Balls' comments, telling the BBC's Today program that "what [Labour] is really saying is 'if you gave us the keys to the car we would drive it in exactly the same way and into the same wall."

"These people have learned absolutely nothing about what went wrong with our economy and that the problems were based on too much borrowing, too much spending and too much debt," the prime minister said.

Tax is expected to play a large part in party manifestos ahead of U.K. elections in 2015 as the country's main political parties look for ways to sustain the economy's economy seemingly robust recovery.

The International Monetary Fund (IMF) forecast last week that the U.K. could see some of the strongest growth among developed economies in 2014, predicting an average rate of 2.25 percent growth in 2014-2015.