UK Political Parties Should Disclose Tax Intentions: Report

by Amanda Banks, Tax-News.com, London

09 September 2009

Audit, accounting and business services firm BDO Stoy Hayward has called for greater clarity from the UK’s main political parties regarding their plans to tackle the deficit.

BDO Stoy Hayward has argued that, due to the ongoing size of the UK's deficit, and the "inevitability" of tax increases, UK political parties should disclose where they would hike taxes.

The firm in particular noted Chancellor Alistair Darling’s comments this week, in which he advocated that there be more openness on where spending cuts will be necessary.

The report, 'Time To Break The Silence' projects where the three leading political parties might increase taxes. The firm believes that the next government will likely be faced with the task of developing new revenue streams to generate around GBP25bn (approximately USD41.5bn) for Treasury coffers.

The report estimates that the Labour government will find a significant portion of this (around GBP16m) through a 1% increase in both employees’ and employers’ national insurance contributions, and the removal of higher rate income tax relief on pension contributions.

The report anticipates that should Conservatives gain power in the forthcoming election, the party will attempt to achieve a similar sum through broadening the scope of, and increasing the rate of, value-added tax.

The firm’s report stresses that decisions on how best to tackle the country’s GBP175bn fiscal deficit should be made soon, and importantly these should be made public.

“All the political parties are more than aware of this; however there is currently very little debate about key taxation policies which will affect UK business, with the three main political parties seemingly preferring not to show their hand until only a few weeks before the General Election,” argued the firm in a statement.

Stephen Herring, Senior Partner BDO Stoy Hayward added:

“This time the scale of the issue means that it is simply unacceptable that the public should be expected to await an inevitably febrile three week election campaign; this is not sufficient time for reasoned debate on tax strategy. We call for all three parties to share their projected tax policies now so that businesses, individual taxpayers and the consumer can become part of the debate. Tax increases are seldom welcome but some increases are much worse than others.”

Recommended