David Cameron, leader of the Conservative Party
“He has finally given us a tax cut. He normally does that before a general
election but he’s in such a deep hole, he’s had to do it before the
leadership election."
As he mounted his critique of today's Budget, Mr Cameron added that Mr Brown "has
wasted money on an industrial scale. He is an out-of-date politician wedded
to state control and the question everyone is asking is ’Where has the money
gone?’."
Menzies Campbell, leader of the Liberal Democrats, described today's Budget as
a "wait-and-see Budget from a wait-for-me Prime Minister".
“We’ve had seven years of booming but often wasted public sector spending,"
he said.
The Centre for Economics and Business Research
"There is a major reform of corporation tax, cutting the rate and
reducing the allowances for larger companies and raising the rate and
raising the allowances for smaller companies – the logic isn’t entirely
clear. The numbers for corporation tax roughly cancel each other.
"But it would not be a Brown Budget without stealth taxes. These have two
forms – hits on companies, especially those with vacant property which will
lose £900 of reliefs, planned to raise in total £1.2 billion in additional
tax revenue and environmental taxes. The restructuring of fuel duties
conceals a sharp rise in the standard rate of duties. In total Brown’s
environmental tax package is predicted to raise him £1.4 billion in
additional revenue.
"So in total, for tax this is a neutral Budget. But the deficit is
forecast to be larger, mainly because North Sea oil production has fallen
faster than had been expected a year ago (no doubt partly in response to
last year’s raid on the oil producers)."
Richard Lambert, Director-General, CBI (Reuters)
“By [cutting income tax by 2p] the Chancellor has acknowledged the need for
the UK to compete with the tax regimes in other developed countries in order
to secure jobs and investment for the future.
“In particular the change will benefit those big profitable companies that
might otherwise be thinking of shifting their activities to lower tax
regimes.
“However the business sector as a whole will not be popping the champagne
corks tonight. These changes will not initially reduce the overall burden of
business taxes, and there will be losers as well as winners. Some big
companies that for one reason or another don’t pay much tax will lose out.
So will small companies that don’t invest much, and so will not be able to
benefit from the new capital allowances.
“Overall, the Budget is only a first step on a journey that will need to go
further. The challenge for government now is to get a grip on public
spending so as to create the headroom that will be needed for further tax
cuts in the years ahead.”
Kevin Hawkins, director general of the British Retail Consortium
"As always the devil may turn out to be in the unannounced detail but the
Chancellor has rightly made a worthwhile reduction in corporation tax and
the anticipated ‘green’ measures seem very sensible.
"The cut in corporation tax is good news. It is being somewhat offset by
cuts in a number of tax reliefs but is a welcome simplification and a
decisive move in favour of jobs and investment."
On the environmental side of the Budget, Mr Hawkins said: "We called on
the Chancellor to cut VAT on energy efficient products to 5 per cent. He
could have done that in the UK immediately but his pledge to push for
Europe-wide agreement is welcome.
"If the EU is serious about reducing carbon emissions it will back this
initiative. It is a pity that incentives for small scale renewable energy
equipment such as wind turbines and solar panels are confined to homes but
the Chancellor has conceded the principle. We hope this will be extended to
business premises next year."
Carol Undy, National Chairman of the Federation of Small Businesses
“This year’s offering is no different to the others – [Mr Brown] gives with
one hand and takes with the other. However, this year, after some welcome
initiatives for our members he throws it all away with a tax hike aimed at
small businesses. Corporation tax was cut for large firms but increased for
smaller ones. Small businesses employ 58 per cent of the private sector
workforce - over twelve million people – and the increase in their tax rate
fails to acknowledge their contribution. A cut in income tax is welcome but
does not fully offset the dismay felt by small firms despite the other
allowances that he has offered."
Professor Peter Spencer, chief economic advisor to the Ernst & Young
ITEM Club
“The Chancellor met his borrowing forecast for this financial year, for the
first time this millennium, but only because of a shortfall in investment
spending. After another large overshoot on current expenditure, the current
deficit came in worse than the Pre-Budget Report forecast yet again. The
Treasury now puts this at £9.5 billion rather than the £7.9 billion
pencilled in last November. The final outturn is likely to be in line with
the ITEM January forecast of £11billions, if not higher. Tax revenues were
almost in line with the PBR forecast, but strength in income tax (up 8.8 per
cent this year) was more than offset by weakness in company payments.”
Patrick Stevens, tax partner at Ernst & Young
"Ultimately, small companies should not be too hasty in celebrating the
Chancellor’s Budget – if they want to take any advantage of his generosity
they will have to invest £50,000 under the new Annual Investment Allowance.
If they don't they'll probably end up paying more tax, as the Small
Companies rate rises to 22 per cent.
"The Treasury had become increasingly concerned that tax revenues were
leaking through the proliferation of very small single person companies and
managed service companies. Today’s changes have been made so that the
incentive for small single person businesses to become companies has been
further reduced. In doing this, the Treasury has listened to business and
acted sensibly. The changes should help to reduce or eliminate disruption to
the employment services industry that was our key immediate concern."
David Philips, director of BDO Stoy Hayward Investment Management
“Extra funding for the Financial Assistance Scheme (FAS) will be a huge relief
and bring joy to tens of thousands of innocent families who have suffered
this gross injustice through the combined failure of their employers and the
government to protect them.
“Whilst this is to some extent a confession of the Government’s failures, and
perhaps an attempt for the Chancellor to curry favour before becoming
leader, it is nonetheless a worthy and very welcome gesture.”
[The FSA provides assistance to members of final salary pension schemes which
commenced winding-up ahead of the inception of the Pension Protection Fund
(PPF) in April 2005.]
Brian Berry, head of UK public policy at the Royal Institution of Chartered
Surveyors
"The Chancellor's application of a reduced rate of VAT on green goods,
such as insulation and double glazing, should have been extended to repairs
to buildings to make the existing building stock greener and more energy
efficient.
"Government incentives continue to focus on new [buildings] rather than
tackle the existing housing stock, which contributes nearly 40 per cent of
carbon emissions. The creation of a one-stop-shop website would also help
owners and occupiers to find energy information in one place."
Kevin Griffin, director stamp tax group at Ernst & Young
“Reducing tax and encouraging environment-friendly building are both laudable
objectives – but will this attempt to combine the two work?
"It may be that the £15,000 tax saving on a new £0.5 million home is
sufficient to pay for marking it ‘carbon neutral’; it is far less clear that
the £2,500 saving on a more average £250,000 home will make any difference,
and what of the £125,000 home, where there is already no stamp duty and
therefore no saving. Is it the case that only wealthier homeowners need
worry about carbon neutrality?”
