Budget 2012!Posted by Anthony Page
Chancellor George Osborne stands up in the House of Commons today and deliver his second Budget, against a global backdrop of uncertainty in terms of economies and employment
Until he stands up no one can be sure what is in that red box of his. You can be certain of one thing though – there will be no big handouts. The recovery is still snail-like in pace and there remain a lot more job losses and redundancies to work through the system, so whatever flexibility Osbourne has will be very limited.
He has hinted strongly that the Stamp Duty loophole used by the very rich to avoid paying tax by buying homes through overseas companies will be closed. The revenues this will bring could be in the low billions.
However, the so-called ‘mansion tax’ will not get a showing mainly because it would be so hard to administer. Nevertheless, the complex changes to our tax system and benefits system will reduce the overall cost of our social security expenditure by making the better off pay more.
Fuel tax will also be eased as the ever-rising cost of petrol and diesel could cost the government votes at the next election. Those of us who are retired will probably see tax thresholds rising for the over-65 and 75s, as well as a general increase across the board for all tax-payers.
That said, Osborne must be careful to avoid giving any tax breaks has to high earners. In itself, the 50p tax rate brings in very little money to the Treasury but it’s a tax that symbolises communal shared pain. If repealed, the tax will surely cost the government votes. So, to this end I expect him to announce a staged reduction from 50p back to 40p over the next three years.
Excise duty on cigarettes and alchol will also rise a little. A minimum per unit cost is certain to be levied on the grounds that it will reduce under-age drinking.
There will also be more support for SMEs as this is the quickest way to create jobs, or at least stop them being squandered. Road Tax may well go up too, as it is easy and cheap to collect.
Other than these, the only big announcement I predict is a reduction in pension tax breaks for high earners – a fall from 40p in the pound to 20p. This will raise a lot of money without effecting middle income earners.
But whatever Osbourne unveils tomorrow, you can be sure it will be designed to collect more tax from those that can afford it and demonstrate to international money markets that the government is firmly in control, and committed to reducing long term debt. Tomorrow will reveal what he really does.
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