This all points to an Autumn Budget – and tax increases. What is round the corner?
Mr Sunak’s Budget is widely expected to be a bold affair having borrowed and spent billions of pounds on the Covid-19 response. The Chancellor is reportedly considering different ways to bring funds back to the Treasury. And he is under a lot of pressure from a variety of people and entities including:
- The Prime Minister and his policy team
- Conservative MPs
- Opposition MPs
- The electorate
- The trade unions who are urging the Chancellor to do more for the unemployed
- Business leaders, most of whom need support after the ravages of Covid-19, particularly in vulnerable areas such as hospitality, tourism and retail
- Local authorities
- The Health Service
- All the zealous guardians of the various trades and professions
Mr Sunak is a flamboyant Chancellor with an eye to the unusual. The creation of the “Eat Out to Help Out” scheme was a successful but unconventional way to stimulate consumer spending. This won’t be repeated but there could well be other ideas in the bag.
With all the political and humanitarian pressures come severe economic pressures. The Chancellor has got to get funds back into the Treasury. At very least he has to stem the outflow. Tax is not his only weapon but he needs to use it to get more paid into the country’s coffers without unduly affecting consumer spending. So which taxes will it be? Take a deep breath…
Income tax - probable increases in higher rates; allowances will be frozen
Capital gains tax - quite probably
National Insurance - quite possibly
Corporation tax - very likely
VAT - possible selective changes
Stamp taxes - possible selective increases
Inheritance tax - quite possible, but more time needed
Environmental taxes and other levies - possibly
Fuel duty - definitely
Insurance premium tax - moderate increase
Air passenger duty - no!…might be a decrease!
Vehicle excise duty - possibly
Alcoholic Liquor duties - moderate increase
Tobacco Products duty - moderate increase
And so the list goes on.
Mr Sunak has not had time to devote to fundamental changes so we can only expect a tinkering of the existing tax code this time with further in-depth changes to follow.
No doubt there will be the usual handbrake on expensive infrastructure schemes and so forth and pensioners may be denied the full increase that they were promised under the triple lock scheme. But the Chancellor should stand by his earlier resolve-to stimulate consumer spending. This will be the most powerful factor in terms of employment, revenue and financial well-being.
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