In what many believe has been something of an extended honeymoon period for David Cameron and George Osborne it seems that this week will see business leaders, children's charities and unions unleash their venom against the UK government. This comes just hours before the announcement of an emergency £85 billion budget which will see cuts in the UK public sector the likes of which have never been seen before.
The Adam Smith Institute has today stepped into the UK capital gains tax debate with a suggestion that an increase to somewhere near income tax rates could actually reduce net tax receipts for the UK government. The institute believes that a rise in UK capital gains tax could actually cost the government up to £2.5 billion a year in tax revenues with investors discouraged from selling assets such as property and shares.
Since taking office just a few weeks ago George Osborne has been very open in his plans to increase taxes and reduce the UK public sector budget. He has suggested an increase in capital gains tax, the potential abandonment of a plan to reduce corporation tax as well as a likelihood that he will increase VAT across the board. So can George Osborne walk the walk now he has talked the talk?
The UK government has this week stepped in to cancel billions of pounds of previous Labour Party projects as a tightening of the UK public sector purse continues. The range of projects which have been cancelled, or delayed, is enormous taking in relatively small operations to multibillion pound training programs. While many have welcomed this move as sensible there are some who are up in arms about a backtracking on earlier promises.
The UK budget deficit was significantly lower than expected in the month of May with a figure coming at just under £12 billion as opposed to a forecast of £20.25 billion. However the government's preferred measurements of the public sector borrowing requirement, on an accrual basis, came in at just over £16 billion as oppose to forecast of £18 billion. Either way, the health of the UK budget deficit would appear to be improving.
The British Chambers of Commerce (BCC) has today stepped forward to warn George Osborne against introducing "punishing" tax rises which will hit UK economic growth. In particular the BCC is concerned about the potential increase of capital gains tax to as high as 50% which will hit many investors hard and potentially withdraw money from the UK economy in the form of additional tax revenue.
George Osborne has today hit the ground running with confirmation that the UK government will put in place a multibillion pound supertax for the UK banking sector. In what has been put forward as "payback time" for funds lent by UK taxpayers to the UK banking industry there will be major changes although how the increased charges will ultimately be funded remains to be seen.
As we approach the emergency budget on 22 June there are calls for George Osborne to bring in a number of radical changes to the UK taxation system and the UK public sector. A number of political analysts have commented upon disarray in the Labour Party offering George Osborne the perfect opportunity to think outside of the box and make a name for himself. But is George Osborne up to the job?
The new Office for Budget Responsibility has today issued a statement suggesting that the UK budget deficit will be around £114 billion for the 2010/11 tax year. This is slightly lower than the £124 billion forecast by Alistair Darling before his departure from number 11 Downing Street but is still a massive figure. The deficit is expected to fall to around £48 billion by 2014/15 which is again lower than the £51 billion forecast by the Labour government while in office.
The British Chambers of Commerce (BCC) has today come out with a heartfelt request that the UK government refrains from ring fencing any budgets in the forthcoming round of budget cuts. There is talk that healthcare and internationally aid could well be ring fenced leaving other government departments to take the lion's share of the cuts. Is this fair?
