Raising Taxes

The too-obvious credit crunch and the looming slowdown are putting pressure on the Chancellor to raise tax from somewhere. He as well as Gordon Brown are anathema to raising the basic rates of tax as it doesn’t reflect on them well at all politically.

Here’s a problem that needs to be sorted out.

A Problem

As it happened last year in the Budget, the credit crunch and the expected slowdown were complete surprises, so nothing much could be done to negate them. This means that a certain amount of tax take could be expected for the coming year. That tax take will not be as large as expected, though.

Gordon Brown’s Golden Rule

Given that Gordon Brown has always stuck to his guns, and ensured that it never exceeded (not counting Northern Rock), if the Chancellor is to keep to that Golden Rule on borrowing,  then he is either going to have to cut spending or raise taxes or both.

Soft Targets / Income Shifting

With IT Contractors and other small businesses being soft targets for the Chancellor when he needs to raise money, it is natural to expect some surprises (or shocks)  as regards Income Shifting, despite PCG lobbying hard against it.

In several instances in the past, the Chancellor has managed to squeeze a bit more money out of us through tax.

Does IR35 bring back past memories?