Chancellor looks to green Budget
March 10, 2008
Green taxes and measures to help people struggling to pay energy bills are likely to be among changes in the chancellor's first Budget on Wednesday.
Alistair Darling is also expected to raise the duty on alcohol, boosting government coffers and addressing public concern at binge drinking.
Mr Darling also faces a demand from business to cut corporation tax.
But dramatic tax cuts look unlikely, given economic uncertainty and strained public finances.
The Confederation of British Industry (CBI) has said that high taxes on business are damaging the UK economy.
Energy
Mr Darling is expected to present a plan to control the tariffs paid by 3.8m electricity customers and 2.8m gas customers who use pre-payment meters, according to the Financial Times.
The measures are thought to be aimed at stopping energy firms making an alleged £400m in excess profits from the country's poorest consumers.
The chancellor is also expected to unveil measures aimed at cutting carbon emissions from cars and a move to increase biofuel use.
Weekend newspaper reports said the chancellor might introduce a levy on new, larger cars, such as people carriers, that could increase their price by £2,000.
The government is likely to increase duty on alcohol above the rate inflation.
The Conservatives said last week they would raise tax on super-strength beer, cider and alcopops to tackle binge drinking if they won the next general election.
Corporate taxes
Richard Lambert, head of the CBI, said a few years ago Britain had one of the most favourable corporate tax environments in the world but that has now deteriorated.
The CBI wants corporation tax cut from 28% to 18% by 2016 and a simpler system introduced.
However, unions say a cut in corporation tax would lead to tax hikes for "ordinary people".
The call comes as business confidence in the government has deteriorated in the wake of the Northern Rock scandal, changes to capital gains tax and amid plans to tax non-domiciles.
According to a CBI report, written by 12 leading tax experts, the UK has failed to match deep cuts made to corporation tax by nations like Italy and the Netherlands.
It says since 1993 the main rate of UK corporation tax has been reduced by 5% to 28%, but Germany has halved its tax rate to 29.8% and the Netherlands has sliced off 9.5%, to 25.5%.
That means that the UK has slipped from fourth to sixth place in the ranking of EU nations with the lowest corporation tax rates.
'Tax hikes'
The Conservatives have also put pressure on the chancellor to cut business taxes.
Shadow chancellor George Osborne told the BBC the Tories planned to pay for cutting corporation tax to 25% by scrapping a number of business tax breaks.
But TUC general secretary Brendan Barber said the chancellor should not listen to the CBI.
"The CBI is calling for both much lower rates of corporation tax and for a huge increase in opportunities for big businesses and the super-rich to avoid paying their fair share of tax," he said.
"If their lobbying was to succeed, it would lead to tax hikes for ordinary people, damaging cuts to public services and abandoning government commitments on child poverty."
Print this page