The run-up to the UK Budget on 11 March 2020, the first since 29 October 2018, is the most peculiar I can remember.
Under then-Chancellor Sajid Javid, the public side of the Budget process started in a fairly typical fashion. There was no shortage of suggestions as to what the Chancellor should do and, in line with the usual pre-Budget purdah, very few leaks as to what might actually be included in the Budget.
The replacement of Sajid Javid by Rishi Sunak has seen purdah crumble during a period of apparently authoritative and credible leaks which purport to pave the way for a limited number of tax changes in the Budget. These reflect the priority which is rightly being given to coronavirus.
- Cancel the reduction in the corporation tax rate from 19 per cent to 17 per cent.
- Review business rates.
- Implement the digital services tax.
- Abolish the tampon tax.
- Raise the point at which the pension contribution annual allowance is tapered.
- Increase fuel duty.
Under cover of the oil price war, which has seen crude oil prices drop to levels not experienced since the 1991 Gulf war, the Chancellor may be able burnish his party’s green credentials by increasing fuel duty – initially perhaps only on diesel for off-road use – with no immediate, significant increase in pump prices.
Fiscal measures alone are insufficient to tackle the economic consequences of coronavirus. Monetary measures will also be required. This suggests the possibility of coordinated action on Budget day, with a separate statement from the Bank of England.
Notwithstanding national and international alarm over coronavirus, the Chancellor should not lose sight of the long-term tax-policy needs of the UK, and for tax simplification. Wednesday’s Budget is being tipped as marking the end of the period of austerity. Let’s hope it also marks a first step to an era of clearer tax policy and simpler tax law.