Rob Gunn, tax director at RSM Tenon, predicted a raft of new measures in next week’s speech.
“We are guaranteed to see the screws turned on the tax avoidance disclosure regime,” he said.
“Given that the 50 per cent tax rate will be introduced in a couple of weeks we do not expect any further changes to the rate of income tax to be announced. Changes to the pensions relief threshold could be a sign of things to come so a consultation on restricting all reliefs to basic rate is likely.”
He added that an increase in VAT was unlikely and that corporation tax could fall by one per cent but this was unlikely for at least 12 months.
Richard Rose, tax partner at BDO in Birmingham, said individual taxpayers and businesses should steal themselves for a frustrating period of uncertainty as party politics overshadow the uncomfortable fiscal imperative to raise tax revenues as a contribution, alongside significant public spending cuts, to curb the unsustainable fiscal deficit.
He said: “In the wake of the credit quake we have seen a £42 billion fall in tax collections.
‘‘This leaves the Chancellor very little room for any tax cuts to curry favour with voters but, equally, he dare not raise taxes significantly in a Budget held only a few weeks before a General Election.
“We can expect a ‘Phoney Budget’ on 24 March with any hard hitting, significant tax raising measures deferred until the second 2010 Budget.
“I fear that the March 2010 Budget is bound to be more about ‘Punch ‘n’ Judy’ politics rather than important fiscal reforms.
‘‘Sadly, it is almost unavoidable that taxes will rise after the election, in addition to cuts in Government spending, irrespective of the outcome. I am convinced that some tax rises are much more damaging than others and this should be a key area of the electoral debate. However, it is almost inevitable that we will need to wait until a second Budget to find out where the tax hikes will occur.”
Philip Cook, tax partner at chartered accountants Clement Keys, said the biggest challenge was to raise revenue without introducing measures that will deter business growth.
He said: “A rise in National Insurance Contributions for example may well reduce the deficit but will penalise those businesses that want to expand by taking on more staff. Research undertaken by the Federation of Small Businesses and the Centre for Economics and Business Research has estimated that a one per cent rise in NIC will cost 57,000 jobs in the UK; this would be detrimental to any recovery in business confidence.”
Property expert and tax partner Daniel Hartland, from Grant Thornton in Birmingham, said the Budget was unlikely to be “earth-shattering” but there was a chance that measures to benefit the private rented sector would be brought forward.
“The Government needs to address the shortfall of financing available in this sector given that the banks have significantly tightened the availability of credit. Businesses have needed to consider alternative methods of finance.If the Government fails to acknowledge this issue, more property firms will fail and the sector will continue to suffer.’’