Posted by By Neil Fraser
Businesses in Bristol expect Chancellor Alistair Darling to avoid some of the “hard-nosed” measures needed to get the economy back on track when he unveils his Pre-Budget Report tomorrow.
The report will be the last before next year’s General Election, with Mr Darling being urged to take radical action to address the UK’s massive budget deficit.
But business leaders in Bristol say tomorrow’s speech will be as much about courting voters with a range of populist measures as the election approaches.
Dave Mouncey, tax partner at accountancy and financial services group Smith & Williamson, says that whichever Government is in power next year, “hard-nosed” revenue raising measures will be required to give it a chance of paying off the deficit.
“However I believe the Chancellor may be tempted to hold back some of the worst news in the Pre-Budget Report, and instead offer some giveaways to specific parts of the community,” he said.
“On the eve of a difficult election, the Government needs to find a chunk of extra money that doesn’t upset too many voters. So we must expect tax increases and spending cuts with high earners bearing the brunt.
“We could see further increases in income tax for high earners, windfall taxes on the financial services, a rise in capital gains tax and plenty of anti-avoidance on tax arrangements.
“We might also get a small rise in corporation tax for small companies, National Insurance could be ratcheted up to target those very high earnings and the salary sacrifice regime could also come under attack.”
Mike Bennett, chief executive of Bristol Media, which has around 3,500 members in creative industries across the city, said he hoped there would be no further hike in capital gains tax (CGT) in tomorrow’s report.
“The tax currently stands at 18% and the fear among a lot of creative businesses is that the Chancellor will raise it once more.
“I know of five or six of our members in the city who are gearing up either to sell or merge their businesses, and they have their fingers crossed that CGT will remain the same.
“These are the kind of successful people who will play a key part in getting the country out of recession and a further rise in capital gains tax would damage their prospects.”
Meanwhile Nigel Hutchings, regional affairs director at GWE Business West, said urgent action was needed to help businesses struggling with the issues of late payment and red tape.
“If there is one thing the Chancellor could do to help business it would be to strengthen the legislation around late payment, which is a huge problem for many businesses,” he said.
“While for many people the current legislation has had a beneficial effect in terms of ensuring prompt payment from customers, others I speak to say the problem has got even worse.
“In addition the whole spectre of regulation remains a massive problem which still needs to be addressed. Despite lots of positive messages coming out of Government about action on cutting red tape and regulation, most of our members are still telling me that this has not happened.”
James Gore, head of communications at Bristol International Airport, which handled over 800,000 business passengers last year, called on Mr Darling to begin the phasing out of Air Passenger Duty.
“Clearly it is important that aviation meets its environmental responsibilities, but the current Air Passenger Duty (APD) is a blunt instrument. We support aviation’s inclusion in the EU Emissions Trading Scheme (EU ETS) from 2012 as the first step towards a global deal to reduce emissions.
“In the meantime, we would like to see the planned increases in APD reviewed, with a view to phasing it out following the introduction of the EU ETS.”
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