When Rishi Sunak, the UK Government’s Chancellor of the Exchequer, took centre stage today to deliver the UK budget, it was notable for a number of reasons. Usually, the budget speech is delivered in an upbeat way with jibes at the opposition being met with chorus of jeers and the Speaker shouting “Order order” over the unruly house.
Today there was none of that – with Brexit still current and the pandemic continuing to generate huge debt for the UK economy, there was no room for frivolity and the speech was delivered as a monologue rather than as an elaborate play.
The Chancellor tried to keep the mood upbeat by trying to stress the positives, but the reality of huge debt, unemployment, continued economic support (over £400bn) shone strongly through in his performance.
Empathising the notion of ‘whatever it takes’ and delivering an honest budget to protect jobs and livelihoods, it was difficult to grasp exactly how the UK intend to repay some of its ever increasing debt mountain.
The freezing of tax thresholds, allowances and most duties will hardly bring in significant cash. It was notable that Airline Air Passenger Duty will be increased but I am not sure this alone will save the economy!
The Chancellor re-iterating that there will be no IT, NIC or VAT rises. In fact the extension of the furlough scheme to September, stamp duty relaxations continuing, better loss relief and super deductions adding to the increasing debt. However some of these measures may be of use to some clients.
Only the raising of Corporation Tax to 25% (and then not for a few years) seemed to point to any direct revenue raising measures.
Though lacking in theatre, there were some cameo appearances from a few good initiatives, which could be thought of locally:
- The idea of a Freeport may create inward investment and infrastructure investment.
- Visa reform scheme to encourage and promote the importation of talent, in stark contrast to some local migration policies, may drive future economic growth.
- Mortgage guarantee scheme to assist in home ownership in an overheated market.
- The establishment of a green infrastructure bank to fuel the green agenda to name just a few.
It being noted that the super allowance is not all one sided as it would unlock huge reserves that would flow into the local economy. Maybe similar initiative is needed in the islands to unlock the huge untaxed reserves.
The document published earlier this week by the Treasury Committee entitled “Tax after Coronavirus” may actually offer more clues about tax in the future that the Chancellor gave today.
Having listened to his story for nearly an hour, I was left unexcited by the performance and certainly was not shouting for an encore. I retreated to the detail of the ‘Red book’ and as always was greeted by my old friends of ‘Tax avoidance’ and ‘Tax evasion’ with the usual plot line of there being more investment in tackling evasion, more penalties, more regulations and more consultations. Some things in life have remained constant despite COVID.
In conclusion…
In summary, I suspect that the long term plan is to rely on the vaccine to have Britain working again before the inevitable tax rises and I am sure that Rishi Sunak is praying for the ‘fixing the economy’ variant.
For now it seems that it is more of the same in theatre land and very much wait and see what the next 6 months hold in the hope that the box office recovers quickly.
Written by John Shenton, Director of Tax, Grant Thornton.
