Over the years, Chancellors of the Exchequer have got into the habit of giving their Budgets a strapline. Given the current challenges facing the Government– and the threats to his own job in a reshuffle - this will be the ‘Budget of a Chancellor under pressure’.
Even without Brexit, the UK tax system is at a crossroads. With the tax base shrinking, the question as to who should pay how much tax on what is more important than ever before. Then there’s the question of which social goods we wish to pay for through the tax system, and whether some current tax reliefs should be reined in because the cost to the Exchequer is not matched by the broader benefits they provide. And of course the role of the tax system in the housing market, tackling social inequality and inter-generational issues.
To do justice to this requires a major public debate followed by the framing of proposals for consultation and then a considerable expenditure of Parliamentary time in enacting new law. With Brexit dominating the Parliamentary programme, time is one thing the Chancellor does not have.
Another commodity in short supply is the Chancellor’s room to manoeuvre.
With the need to restore voter confidence, to reflect the fiscal and economic needs of the UK and to impart a sense of control and order to a government which is perceived to be riven by divisions, there is a growing expectation that the Chancellor will deliver a big, bold Budget. This might include:
- an overall increase in taxes;
- restrictions on cherished tax reliefs;
- new anti-avoidance measures following the ‘Paradise Papers’;
- first steps to reform VAT;
- an indication of the direction of travel for future workplace tax and NIC changes following the Taylor review; and
- more resources for HMRC to tackle tax evasion.
Our detailed predictions are contained here. We hope you find it informative, useful and interesting.