The Great Debate UK
Rachel Mason is public relations manager at Fair Investment Company. The opinions expressed are her own.-
So the new coalition government is putting VAT up from 17.5 percent to 20 percent on January 4 2011 and the country is up in arms, but is it really that bad?
Okay, in an ideal world, taxes would be low and public services would be top quality, but sadly, the world we live in is not like that. The Institute of Economic Affairs (IEA) says Britain’s real debt is already 4.8 trillion percent – six times higher than the official figure of 772 billion pounds – and the simple fact is we need to pay it back, and to do that, the government needs to raise tax and cut spending.
A rise on income tax would have been a very unpopular move, so the government really only has one option left – VAT.
We were promised a Budget that would be a game-changer, and that’s exactly what we got today – ambitious, dramatic, and presented with conviction and confidence (as it needed to be).
The Chancellor had four objectives in view:
London-based Roger Bootle, director of Capital Economics and an advisor to business accountancy firm Deloitte, shares his thoughts on what Chancellor George Osborne’s budget may hold and its long-term effects on the economy.
Bootle suggests the coalition government must narrow the deficit for this year and give confidence to the markets that something will be done longer term to restore the economy to health.
-Julia Whittle is principal and head of international, Punter Southall Financial Management. 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. –
We would certainly expect Chancellor Alistair Darling to use this budget to make a strong statement ahead of the general election to try to repair public confidence, but this may be difficult without making the situation worse.
The cost of tax collection in the UK is almost 20 billion pounds per annum, according to a recent report from Britain’s Institute of Economic Affairs, a free-market lobby group.
The amount reflects the cost of compliance and administration as well as Britain’s handicap of having the longest tax code in the developed world, co-authors Francis Chittenden, Hilary Foster and Brian Sloan write in “Taxation and Red Tape”.
Thomas Story is tax director at BDO. He will participate in a Reuters Budget live blog at noon GMT on Wednesday, March 24, 2010. Please tune in and join the discussion.-
The March 2010 Budget, to be held next Wednesday, will inevitably be highly political as it is effectively the starting gun for the general election campaign. In this context, further significant fiscal measures to tackle the 178 billion pound government deficit will almost certainly be postponed.
Some political observers fret over the paucity of policy initiatives emerging from Britain’s two main political parties ahead of a general election expected on May 6, as pre-election rhetoric turns its focus toward the possibility of a hung parliament.
Such a scenario raises fears of further economic instability if financial markets react badly to the uncertainty the result might bring to the political arena.
-Damian Stancombe is head of Corporate Defined Contribution Pensions at Punter Southall Group. The opinions expressed are his own.-
Three things to keep in mind for defined contribution pensions:
Pension plans help build financial security in retirement, and in the face of a looming pensioner crisis the government continues its efforts to increase the number of savers. There is one exception: if you earn more than 150,000 pounds all bets are off.
As political parties step up their campaigning ahead of a general election due by June 2010, voters need to know exactly how politicians plan to tackle a projected deficit of 175 billion pounds, says Stephen Herring, senior tax partner at accountancy firm BDO LLP.
In a report titled “Time to Break the Silence” BDO suggests there will not only be cuts in public spending, but substantial business tax increases.
from The Great Debate:
Higher taxes? Lower public spending? Devaluation? Inflation? Investment in green growth?
European governments are pointing in very different directions as they debate an exit strategy from the global financial crisis. Despite European Union efforts to coordinate economic policy, there are clear signs that the main European economies will charge off in disarray towards separate exits.