Chancellor Alistair Darling defended tax hikes on high earners after coming in for criticism over his new 50p rate of income tax.
Mr Darling told the annual convention of the Institute of Directors (IoD) that those with the “broadest shoulders” must pay their share, when asked about the higher rate of tax for those earning more than £150,000 a year.
He insisted he had no choice because of tumbling tax revenues due to the near-collapse of the banking sector and the recession generally.
He said: “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.
“And 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.”
Mr Darling received polite applause from the 2,500 directors packed into London’s Royal Albert Hall for the one-day conference, but he faced tough questions from IoD director-general Miles Templeman about the new higher rate of tax.
Mr Templeman said the measure would not be a “big yielder” and could be “counter productive”.
He told the chancellor there had also been reports that high earners would take moves to avoid paying the extra tax.
Mr Darling said he did not believe it was “unreasonable” to ask high earners to shoulder some of the strain on the economy, adding the Government did not have a “theological attraction” to taxes.
“We have to make sure we have sustainable public finances,” he said.
Mr Templeman later warned that some senior business figures might consider quitting the UK over taxation.
“Businessmen are very mobile – they can operate anywhere,” he said.
“There is a lot of noise about individuals saying they will leave the country.”
The IoD leader said he believed the Government should consider imposing a pay freeze on public sector workers and look more urgently at cutting spending.
He said: “Companies are having to make difficult, painful decisions but I still don’t think the Government is taking it seriously. The public sector has to address that.”
TUC general secretary Brendan Barber commented: “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.”