Brown's budget all set to ring in humongous tax regime

Brown's budget all set to ring in humongous tax regime

	Published : Mon, 20 Mar 2006 08:05 By : Andrew Stead Print this Story

LONDON - Chancellor Gordon Brown is all set to raise the tax burden on Britons to an all-time high when he presents his budget on Wednesday, according to a new analysis by accountants Ernst & Young. The analysis predicts that the tax burden will be 37.6 percent of GDP in 2006 and by the time Brown presents his next budget, this will have increased to 37.8 percent.

“It’s an all-time high and we’re entering uncharted waters,” said Peter Spencer, an economic adviser at the Ernst & Young. “We know higher taxes help explain what is happening on Britain’s high streets.” The report said that the new tax increases are partly because of the declining revenues from Britain's North Sea offshore oil industry, which has brought in lucrative taxes for the government.

"This will represent an all-time high in the non-North Sea share, higher even than after Howe's recently celebrated Budget of 1981, 25 years ago, when the corporation tax stood at 52% and the top rate of income tax at 60%," Spencer, who advises Ernst & Young Item Club said. He also issued an ominous warning that the tax burden will go on breaking records until the Labour was in power.

The level of taxation was stifling the economy and the consumer spending, the report said. "The Treasury can't have it both ways," said Spencer. "They can't expect us to pay higher tax, fuel and utility bills while keeping the economy afloat by shopping in the high street."

Reacting to the report, George Osborne, shadow chancellor said, “After nine years of Gordon Brown and 10 budgets this will be his legacy, the highest tax burden ever.” It is not only the consumers and the North Sea companies that are bearing the brunt of this humongous tax regime.

Small businesses are also being affected thus canceling out the scope to grow. In the last five years, the tax burden for these businesses has jumped from £4.4 billion to an estimated £9.5 billion. Sir Digby Jones, CBI director-general said the complaint was not of the increased burden, “The thing I hear from all quarters is that it is not just that they’re taking it off you, it’s that when they do they haven’t spent it wisely,” he said.