Archive for the ‘Aims/Achieve.’ Category

Budget: Aims & Achievements.

mercredi, mai 4th, 2011

To support MPs debating the Finance Bill (developed from the Budget) in the House of Commons on the 3rd May, and to establish a system of monitoring yearly progress towards improving the longer term growth prospects for the UK economy, the Treasury Select Committee has established certain criteria. Such criteria include:
? Fairness
? Growth
? Competition
? Certainty & Simplicity
? Stability
? Practicality & Coherence.
Tax experts from the professional associations and institutes for accountancy and taxation were then invited to evaluate the Budget against the above criteria which are considered important for good tax policy.
Now the Chancellor in his Budget has emphasised his twin aims of e.g. ensuring fairness in taxation and encouraging growth in the economy and the tax experts in general support the cut in corporation tax, the increase in entrepreneur tax relief and the limiting of tax haven status for foreign subsidiaries of UK multinationals.
However, the increased tax burden on middle-income (£40,000 – £50,000) households when also withdrawing their tax credits and child benefits is viewed as unfairly taxing them (The Squeezed Middle?) proportionally more than those on higher incomes. Again, the surprise windfall tax on North Sea oil companies although considered simple and clear does not on the other hand support the need for tax policy stability and growth in the economy. The unexpectedness of the tax rise could also impact competiveness. In addition, the changing level of the bank levy, the latest change in force from 1st January, adds instability and uncertainty to the long term tax regime as far as the banks are concerned. Further, to reduce capital allowances to offset the effects of corporation tax cuts on the overall tax take, introduces incoherence within the business tax system when this also results in e.g. unincorporated businesses being penalised by this capital allowance reduction.
It will be interesting to see if the Treasury Select Committee succeeds in this Budget monitoring role which is similar to the Congressional Budget Office in the USA but without proportionally similar resources.