Expect tax on firms to increase
Alistair Darling will increase the tax burden on businesses in his first Pre-Budget Report (PBR), it was claimed today.
The Chancellor of the Exchequer is likely to cut red tape but hike up green taxes, according to Grant Thornton.
The accountancy firm said the PBR, which is due to be published later today, would see Mr Darling following his predecessor's, PM Gordon Brown's, lead by continuing to shake up the tax burden on UK businesses.
Although there will be a simplification of taxes and the introduction of measures to encourage research and development, he is likely to apply a renewed focus on green taxes to improve the Government's environmental credentials, it said.
Grant Thornton also expects him to tackle the issue of private equity reform.
"The Chancellor could introduce tax incentives on both R&D and green issues to kill two birds with one stone: encourage the development of alternative fuels to reduce our carbon footprint as well as generate wealth and ensure the UK's ability to compete in the global knowledge economy," said Steven Phillips, tax director at Grant Thornton in Belfast.
The firm also called for a lower corporation tax rate.
"We want to see neutral tax reforms and changes in the core tax rates to give a boost to small and medium businesses," he added.
Meanwhile, Alan Bridle, head of research at Bank of Ireland in Northern Ireland, said Mr Darling would give the Executive its first real test on the economy.
He said: "Although election pressure has been removed, the Chancellor may signal potential reform of inheritance tax (IHT) and stamp duty, something which would resonate strongly in Northern Ireland's property-addicted economy.
"But further hikes in green taxes may be unwelcome news in Northern Ireland. We have a high dependency on road transport, while our burgeoning aviation sector would not welcome further increases in Air Passenger Duty."
He said the outcome of the Comprehensive Spending Review would have a deeper impact than tweaks to household tax and benefits.
"As Peter Robinson, the local Finance Minister, has indicated, a slowdown in public spending growth could translate to real growth of about 1% a year for Northern Ireland.
"Major changes in expenditure plans can have a disproportionate effect on Northern Ireland."