If press reports this morning are to be believed it is likely that taxes will rise at this week’s Budget. Essentially, we have a Chancellor who is conservative in all definitions of the word, and caution rather than prudent is the word of the day.
He would be well advised to be so. We have huge uncertainty over the economic effects of Brexit – remember we haven’t even exercised Article 50 yet, let alone left the EU. So improved public finances shouldn’t be squandered on short term gratification.
But the NHS is always under pressure and lack of funding for social care, despite changes to the way in which local authorities can raise funding for these, seems to be the biggest call on the Chancellor’s time.
As covered here in the Financial Times, https://www.ft.com/content/851edce8-f1fd-11e6-8758-6876151821a6 I believe there is a risk that taxes could be raised on the growing number of self-employed and those who use service companies. The government is already looking at this growth albeit from the perspective of workers’ rights and benefits. But it is a short step to looking at the tax effects too.
Changes in NIC would be particularly straightforward. And wouldn’t break the Tories election pledge not to raise the headline rates of Income Tax, NIC and VAT. Vitally, most wouldn’t see thr distinctions that exist between workers with different tax status.
He could sell increases as harmonisation – or as directing taxes raised towards specific needs – such as the NHS or social care. Another step towards hypothecation…