Budget? A fudge-it, more like
– Claer Barrett is associate editor of the Investors Chronicle. The opinions expressed are her own. She will participate in a Reuters Budget live blog at noon GMT on Wednesday, March 24, 2010. Please tune in and join the discussion. —
Covering the budget is usually an exciting time for a personal finance publication like the Investors Chronicle – but this year, the adrenaline has been replaced by apathy.
Is Alistair Darling really likely to make sweeping cuts or announce tax rises so close to a general election? Not ruddy likely. We think it will be the first budget of the new government that will contain most of the nasties (be it Tory, Labour, Lib Dem or a coalition of all three) and that the Chancellor’s speech will be more of a “fudge-it” than a budget.
Whilst our crack team of journalists is not expecting any earth-shattering news for private investors on Wednesday, the real budget – when it happens – offers plenty of worrying things to plan ahead for.
We have already flagged our fears about higher-rate pension contributions being scrapped – last week, our personal finance guru Maike Currie urged readers to put as much money into their pensions as possible. “It may not happen on Wednesday but higher-rate tax relief on pension contributions is a sitting duck,” she warns. The tax attack needed to shrink the burgeoning deficit is the reason why.
Capital Gains Tax (CGT) could well be hiked up from 18 % – but again, we are not anticipating this to happen on Wednesday. Aside from alienating the electorate ahead of polling day, Mr Darling could trigger a fresh housing slump or stock market crash if investors rush to take profits before the rise.
Our current editorial campaign, The Investors’ Manifesto, is calling for root and branch reform of the fiendishly complicated pensions framework in this country. Those who have worked hard, saved diligently and invested shrewdly should be rewarded with a clear, fair and concise private pensions system – rather than simply becoming candidates for increasingly punitive taxation. To add your voice to the debate, click on the Investors Chronicle’s homepage, or leave comments below.
Darling is unlikely to provide any answers on Wednesday. Instead, as a reporting team, we are preparing ourselves for populist assaults on easy targets like bankers and non-doms, plus sabre ratting on anti-avoidance measures and some feel-good green initiatives thrown in for good measure. Finer details of how the higher-rate tax band will be implemented come April are also expected – hardly a topic to fill a journalist’s heart with joy – but we will spell out the nitty gritty nevertheless.
All in all, I’d rather be doing my own job than the Chancellors!