CHANCELLOR George Osborne is facing the “most difficult balancing act” of his time in office in the shape of Wednesday’s Budget.
That’s the view of Graeme Crawford, tax partner at Ernst & Young in Birmingham, as speculation grows around the Chancellor’s plans including suggestions he could be ready to drop the 50p tax rate.
Mr Osborne is known to be giving thought to the issuing of 100-year gilts and extending tax breaks currently available to film makers to the producers of large-scale television dramas.
He is also expect to set out in more detail his plans for a new credit easing scheme designed to offer small businesses better access to funding.
TheBusinessDesk.com will have comprehensive coverage of the Budget on Wednesday with insight from experts at Ernst & Young.
Mr Crawford said: “With the UK in the depths of austerity, the Chancellor faces one of his most difficult balancing acts to date. How can he stimulate growth without significantly increasing the burden on Treasury’s coffers?
“The corporate tax system will undoubtedly play its part and businesses will be closely watching the Budget speech for anticipated announcements on Controlled Foreign Companies rules, General Anti Avoidance Rule, corporate tax rates and enterprise zones, to name but a few.
“One of the biggest challenges facing the Chancellor in this year’s Budget is personal taxation and how he will respond to the debate around how to tax people at different levels of the income scale. Could we see a mansion tax or other wealth taxes? How will he find the funds to raise the personal allowance? This could be time for a fundamental rethink about ways of raising revenue from the personal tax system.”
A new report from the Ernst & Young ITEM Club published this morning suggests Mr Osborne is set to benefit from a £7bn windfall as public sector borrowing undershoots its target.
However, the report warns the Chancellor against introducing any early giveaways in the Budget which, it says, would only have a limited impact and could send the wrong signals to rating agencies and the financial markets.
Readers of TheBusinessDesk.com will be able to follow, and comment on, the major announcements from the Budget via our liveblog which starts at midday.
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