BUDGET 2016: Osborne to focus on revenue raising measures
FACED with a slowing economy and challenging public finances, Chancellor George Osborne is expected to focus on revenue raising measures to help him deliver his fiscal mandate, experts at EY have said.
Andrew Spence, Tax Partner at EY in the Midlands, said: “The Chancellor chose the March 16 to deliver this year’s Budget missing the Ides of March by one day. With a deterioration in the public finances since the Autumn Statement, the austerity that was expected then may well appear this time around.
“As the Chancellor will be looking at his options to help him balance the books, this can be expected to be a tax raising and tax generating Budget with the state of public finances giving little wiggle room for any largesse. The Chancellor will have his focus fixed on achieving a surplus in 2019/20.”
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So what will Mr Osborne be considering ahead of Wednesday’s announcement.
On Business tax, Mr Spence said that for a while, businesses had been asking for a ‘roadmap’ providing a clear indication of where the tax system was heading.
“The business tax roadmap is expected to encompass a whole series of taxes from the next steps on the implementation of OECD’s Base Erosion and Profit Shifting (BEPS) recommendations, to business rates, energy taxation, next steps on the digital initiative that was announced in the Autumn Statement, as well as a redesigned tax policy framework,” he said.
“Bringing all this together into a coherent plan is quite a challenge, but it is something businesses have been looking forward to. The Corporate Tax Roadmap introduced at the start of the last Parliament will be a hard act to follow given its popularity amongst businesses. There will need to be some proposals of real substance in this document if it is to result in the same level of certainty and added investment.”
With the reduction in corporation tax, the relative burden of business rates has increased substantially, said Mr Spence. At the time of the Autumn Statement advisors were expecting the Government to announce where it had got to after the consultation on business rates closed.
“Instead we got an update on the tax administration side of business rates,” he said. “This time, as part of the business tax roadmap, we’d expect more substantial announcements. The Government’s intention to ensure that any new system raises the same amount of money could constrain reform. However, given that this tax doesn’t change with profits, it can be one of the most onerous particularly for retailers and manufacturers and now could be a good time to modernise it.”
Follow our coverage of this week’s developments here on TheBusinessDesk.com
