This year more than ever, perhaps inspired by the US Financial Summit, the people of the UK waited for the Pre-Budget 2008 with the hope to see some light at the end of the tunnel.
After listening to Mr Darling today the words “been there, done that” inevitably come to mind.
Of course we welcome the bringing forward of £3 billion of capital spending to 2008/09 and the small 2.5% VAT temporary rebate. These are the two most important measures introduced this year. Would that be enough to fuel the British Economy?
Personally, I was expecting a smarter use of tax policies aimed to increase business confidence, consumer expenditure or to attract further investment from companies or entrepreneurs.
It is difficult to see how a temporary reduction of 2.5% in the VAT rate could be sufficient to generate trust among the business community, nor to talk about consumers.
Very little else has been said beyond the traditional liturgy. As every year the personal allowances are updated, some adjustments in the National Insurance Contributions are made and improvements in the collection of taxes are also announced. That’s All Folks!
With a little bit of twisting here and there, this report could have been similar to that of previous years from a purely tax point of view.
Let’s look at the press notices to highligh the main points of this report.
The HM Treasury Pre-Budget 2008 Report Press Notices
- Facing global challenges: supporting people through difficult times. A nice introduction to respond to people’s expectations. Fair enough if you stop reading here.
- VAT, Income Tax, NIC, etc….. Nihil Novi Sub Sole, apart from the 2.5% temporary VAT rebate. You can determine by yourself if any of these measures could help to increase business confidence, consumer expenditure or attract further investment from companies or entrepreneurs.
- Ensuring fairness for all taxpayers A real classic before elections and let me make the point clearer by quoting: “The Chancellor announced today a package of measures designed to protect the tax system from abuse and ensure that all individuals and businesses pay the right amount of tax”. How is this going to be achieved without investing more in the Tax Offices of HM Inland Revenue and Customs, its staff and its IT systems?
We, the people working in the real economy, look forward to see a smarter use of tax policies to fuel the Economy. It would be great to see that the Pre-Budget 2008 is left behind by a new 2009 Budget acting as a real catalyst for the UK Economy.
Should Mr Darling have paved the road for some hopes to arise is something to be seen. I can not wait to see the Big 4 as well as financial analysts’ comments in tomorrow’s papers.
Meanwhile, and as usual I welcome your comments.
************************************************************************************************
Tony Cohen, a former colleague and partner of Deloitte UK heading the entrepreneurial business team, says:
“We welcome the fact that the Chancellor has announced a number of relatively small measures which together will certainly help entrepreneurs and SMEs in the current economic environment.¨
…The deferral for one year of the rise in the small companies rate of corporation tax is also welcome – although it is just for one year. Will this be a sufficient amount of time for these businesses to recover as they will likely need more time to rebuild?….
….On the face of it there is a massive pot of up to £3 billion available to the UK’s growing businesses. The big question is how, how much and how easily they get their hands on it. Entrepreneurial businesses need funds to flourish and all the measures in the Chancellor’s Pre-Budget Report, most especially the access to cash, will focus the mind of the UK’s entrepreneurs.”
Tags: UK Tax