Monday 19 March 2007

Budget preview

Well I know the budget is only on Wednesday, but I thought it may be a discussion worth having to see what are the treats that Gordon Brown has in store for us tax payers.

At times such as this we need to turn to tax accountants and economists, who have so much skin in the game for a decent look at the prospects for the budget given current economic conditions.

I start with the E&Y view, two horrid ideas here. One is actually extending the reach of Inheritance tax (rather counter to the views of Nick Drew). This is as always a nice socialist and regressive tax.

The second key idea is a new 'planning gain' tax. This is a tax on property where the planing permission has been changed. As such it is a tax on future development. This will utterly stymie the small property developers in favour of large ones. it is also an extra tax as large developers already sign bribes in the form of section 106 (e.g. you can build houses but must pay for a bypass too etc.)

KPMG's view on the state of the economy is as follows:

"There will be questions about the next cycle however. Since the early 2000s, public spending has risen at a much faster rate than the economy as a whole. But without higher taxes, this leeway has been used up, particularly now that public debt has risen to within a few percentage points of its 40 percent of GDP ceiling.

Consequently total public spending growth is slated to slow sharply over the next four years, to below the rate of growth of the economy. Education is expected to be a priority although we will probably have to wait for the Comprehensive Spending Review in the summer for full details of the allocations to health, alleviation of child poverty, etc.

Even this projected squeeze on spending still leaves the public finances looking tight and although there is no immediate need to raise taxes, equally there is no scope to cut them."

PWC have a great predictions website, two of their highlights are the possibility of further green taxes on cars and new taxes for carbon consumption. The Chancellor knows a helpful bandwagon when he sees on.

Finally, Deloitte's Roger Bootle is quite scathing about the state of the economy. he is brave enough to state that the real GDP deficit is more like 90% rather than the 37% the Chancellor fictitiously maintains and also notes taxes need to rise by £10 billion.

So what do you think? My prediction is for more stealth taxes as the Chancellor needs a war chest. He can't go and become PM without any money for baubles to offer. So he will store them up now and try to hide behind all the other mess that Blair and crew are creating.

Mostly, we will be poorer by Friday.


James Higham said...

Thanks for bringing this to our attention because I had neither the time nor the inclination to research it myself. Think I'll come here for my financial analyses.

Anonymous said...

I have faith in Gordon even if no-one else does

Anonymous said...

nick drew said...

I have faith in Gordon even if no-one else does


Anonymous said...

The self employed in a corporate wrapper are going to get a bashing: dividends from personal service companies will be subject to NICs in the same way as directors' salaries.

Anonymous said...

Heard a rumour today about a few things: introduction of VAT on certain items and maybe even a rise on some. Propery tax reform; euphymism of course for more tax.

A goo freind who has been in today and works for the city has said they are expecting some corporate tax rises in a big way on the service industry and banks.

He also reiterated that any stealth tax he thinks he can raise he will, an also reiterated that he has to do it because the idiot has overstretched even the badly damaged wider economy.

I think he was talking shite, but he reckons Brown could be setting us up for Euro entry and also that he doesn't believe he was against the Euro at all and was only reported as such because it was politically expedient.

Newmania said...

I think your final prediction is probably on safe ground CU.. but politically, rasing taxes now is going to be death for the Chancellor isn`t it.

I was reading to day that 800,000 addtional jobs in the Public sector have been created by New Labour and there has to be loads to save in that lot . Sadly these are the voters he needs so I don`t see this coming.

BTW Another rumour today that Brown is thinking about PR ..I saw a bit of it in the discussion section to the New Statesman. I wonder if Brown thinks he is not in a position ot turn back on his left Labour suppport and therfore cannot win in England. The local Tartan elections will be a a victory for the SNP and that is going to out the whole basis of a Labour Government in question not just now but ever again.

Under these circumstances he might go for pulling the whole Constitution down , it would be typical of the Labour party and the end of accountable governement.

It will be interesting but I see this budget as a straw in the wind as to whether he is going to attack the centre ground or not . If not I fear for the future.

Cheerio CU

CityUnslicker said...

Well today is th day now so we will see later.

I think personal service companies were always goign to get it and my colleagues were in with the Chancellor yesterday discussing closing the loopholes.

A property tax revaluation will be so unpopular, if he does that it is really suicidal.

As for PR Newmania, well it may be they choose this route. This is the favoured route for the House of 'Lords' now already.

it is the end of 200 years of democracy too if he does; but could he do it without a referendum?

CityUnslicker said...

PH - Hmm..that and you are not an Old Etonian and have not offered to pay your own election expenses out of daddies wealth...

Anonymous said...

Just got a decent prediction...

Virtually everything he does say will be based around reform, reform, reform...and all the tax rises will be phased in under the pretext of this reform. Big corporations are going to feel the pinch in a big way, probably the banks.

Newmania: he has to raise taxes, he has knowehere to go and the level of debt is such that he daren't borrow more. I don't believe he will do anything about PR.

...there may be an announcement on party fucking

Now it is just wait and see.

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