The Conservative's coalition partners, the Liberal Democrats, are demanding that any cut in the top income tax rate be offset by measures to hit the wealthy some other way, perhaps through a "mansion tax" on expensive homes or a reduction in tax relief on pensions. Osborne said in a television appearance on Sunday that the budget would include measures to stop the use of offshore vehicles to dodge the tax on home purchases, a tactic reportedly used by rock stars and wealthy foreigners.
Osborne is keen to deflect attention away from the debate over the 50 pence tax and on Sunday insisted that this week's budget would be geared to helping working people on low and middle incomes. "That is our priority," he said.
He is expected to announce an increase in the so-called personal allowance, the amount of income exempt from taxation. The change would have the greatest impact at the lower end of the income scale.
Given the constraints Osborne faces, analysts at Barclays Capital expect the budget to offer "nothing more than a modest rearrangement of the fiscal furniture."
The debate surrounding the 50p rate is missing one vital component: the amount of money the tax has raised. The government's tax and revenue office has done an analysis, but Osborne will keep that total secret until Wednesday when he finally comes clean on his plans for the contentious charge.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.