PR1Berske
Alligator in chains by the park gates.
As ever the meat of this week's Budget has already been leaked. I'll start this thread with "what the papers say"
The Guardian:
The Telegraph:
Financial Times
Sunday Times
The Guardian:
Here are some of the budget stories from today’s papers.
Oliver Wright and Steven Swinford in the Times say Jeremy Hunt wants to cut national insurance by 2p in the pound. They report:
Jeremy Hunt is drafting plans for up to £9 billion worth of tax rises and spending reductions in an effort to balance the books and pay for a potential 2p cut in national insurance …
Hunt is not expected to cut income tax as he focuses instead on further reductions in national insurance, which is only paid by those in work. Cutting national insurance is cheaper than income tax and will allow Hunt the flexibility for further budget announcements.
These will be paid for by a series of “stealth” tax rises amounting to up to £4 billion, along with potential plans to reduce government spending after the next election. They include removing tax breaks from second-home owners who rent out their properties as holiday rentals, reducing the scope of “non-dom” tax relief and extending the levy on the profits of North Sea oil and gas companies.
George Parker in the Financial Times also says Hunt wants to cut personal taxes. He says:
The chancellor has been looking at an “emergency package” of revenue raisers to pay for personal tax cuts, including stealing Labour’s plan to scale back the “non-dom” tax regime, securing between £2bn and £3bn a year.
Also on Hunt’s list of potential revenue raisers are an increase in air passenger duty for business travel, an extension of the windfall levy on oil and gas producers, a tax on vapes and abolishing the furnished holiday let regime, according to those close to the Budget process.
Hunt could raise a further £5bn to £6bn a year if he cuts public spending plans in the next parliament, a controversial idea which has led to claims from economists that he is funding tax cuts now by making “fictitious” promises about the future.
The chancellor is also planning to use the Budget to insist he can make the state leaner and more efficient: he has already announced plans to cut civil service numbers to their pre-pandemic levels.
Oliver Wright and Steven Swinford in the Times say Jeremy Hunt wants to cut national insurance by 2p in the pound. They report:
Jeremy Hunt is drafting plans for up to £9 billion worth of tax rises and spending reductions in an effort to balance the books and pay for a potential 2p cut in national insurance …
Hunt is not expected to cut income tax as he focuses instead on further reductions in national insurance, which is only paid by those in work. Cutting national insurance is cheaper than income tax and will allow Hunt the flexibility for further budget announcements.
These will be paid for by a series of “stealth” tax rises amounting to up to £4 billion, along with potential plans to reduce government spending after the next election. They include removing tax breaks from second-home owners who rent out their properties as holiday rentals, reducing the scope of “non-dom” tax relief and extending the levy on the profits of North Sea oil and gas companies.
George Parker in the Financial Times also says Hunt wants to cut personal taxes. He says:
The chancellor has been looking at an “emergency package” of revenue raisers to pay for personal tax cuts, including stealing Labour’s plan to scale back the “non-dom” tax regime, securing between £2bn and £3bn a year.
Also on Hunt’s list of potential revenue raisers are an increase in air passenger duty for business travel, an extension of the windfall levy on oil and gas producers, a tax on vapes and abolishing the furnished holiday let regime, according to those close to the Budget process.
Hunt could raise a further £5bn to £6bn a year if he cuts public spending plans in the next parliament, a controversial idea which has led to claims from economists that he is funding tax cuts now by making “fictitious” promises about the future.
The chancellor is also planning to use the Budget to insist he can make the state leaner and more efficient: he has already announced plans to cut civil service numbers to their pre-pandemic levels.
The Telegraph:
In December, it seemed as though he might have fiscal headroom of £20bn, but more recent estimates have been in the ballpark of £15bn.
Over recent days, there have been suggestions that he might have even less, although I suspect this may be a case of the Treasury trying to manage expectations.
A sum of £15bn is not negligible but it wouldn’t allow him to do much to reduce the key tax rates.
For instance, a 1pc point cut in the 20pc basic rate of income tax would cost £7bn per annum, while a 1pc point cut in the rate of National Insurance contributions for employees would cost £5bn, and a freezing of fuel duty would cost £6bn. So he could probably manage to do two of these measures but not all three.
There is also surely a strong case for ironing out anomalies in the tax system, including its interaction with the benefit system, which results in people at key pinch points paying marginal tax rates of over 60pc and, in some cases, over 90pc. But I expect that sorting these out will be deemed too expensive for now.
And then we come to inheritance tax, on which the rumour mill has recently fallen silent.
The Chancellor is highly unlikely to abolish this tax in one go but he could conceivably raise the threshold for paying it or reduce the rate. This would have the added attraction of making things particularly difficult for Labour. It would be under pressure to say whether it would reverse these changes.
Over recent days, there have been suggestions that he might have even less, although I suspect this may be a case of the Treasury trying to manage expectations.
A sum of £15bn is not negligible but it wouldn’t allow him to do much to reduce the key tax rates.
For instance, a 1pc point cut in the 20pc basic rate of income tax would cost £7bn per annum, while a 1pc point cut in the rate of National Insurance contributions for employees would cost £5bn, and a freezing of fuel duty would cost £6bn. So he could probably manage to do two of these measures but not all three.
There is also surely a strong case for ironing out anomalies in the tax system, including its interaction with the benefit system, which results in people at key pinch points paying marginal tax rates of over 60pc and, in some cases, over 90pc. But I expect that sorting these out will be deemed too expensive for now.
And then we come to inheritance tax, on which the rumour mill has recently fallen silent.
The Chancellor is highly unlikely to abolish this tax in one go but he could conceivably raise the threshold for paying it or reduce the rate. This would have the added attraction of making things particularly difficult for Labour. It would be under pressure to say whether it would reverse these changes.
Financial Times
So, what tax-cutting tricks does Hunt have up his sleeve? A whole host I would say, given he has been responsible for raining down on the nation’s head a hailstorm of tax rises – either explicit or implicit through the freezing of a whole mishmash of allowances.
I would assume income tax cuts will be a priority. They seem to resonate most with the public.
If not income tax cuts, then maybe further reductions in national insurance rates (income tax in disguise) to add to the recent cut from 12 to 10 per cent for some 27mn workers, and smaller decreases for the self-employed.
I would assume income tax cuts will be a priority. They seem to resonate most with the public.
If not income tax cuts, then maybe further reductions in national insurance rates (income tax in disguise) to add to the recent cut from 12 to 10 per cent for some 27mn workers, and smaller decreases for the self-employed.
Sunday Times
In a last-ditch attempt to cut personal taxes by 2p in the pound, Hunt and Prime Minister Rishi Sunak are expected to meet tonight to decide on whether to cut income tax and National Insurance, the Sunday Times reports.
One source told the paper: "1p is affordable, 2p isn’t. We’re trying to make it, but we don’t know whether we can."
In an attempt to make the numbers stack up, Hunt is reportedly planning a £300 million tax raid on people who rent out their second homes as holiday lets. The Times says he would do this by abolishing a series of tax perks for these landlords.
One source told the paper: "1p is affordable, 2p isn’t. We’re trying to make it, but we don’t know whether we can."
In an attempt to make the numbers stack up, Hunt is reportedly planning a £300 million tax raid on people who rent out their second homes as holiday lets. The Times says he would do this by abolishing a series of tax perks for these landlords.
