The Chancellor's pre-budget report today, which is likely to help hard-pressed small firms, homebuyers, jobless and pensioners, is likely to be a Robin Hood event, a Kent expert predicts.
In what is seen as the most crucial financial announcement since the Government came to power in 1997, Alistair Darling will ditch prudence and unveil a raft of tax cuts – some temporary - that could cost up to £100 billion.
But in the guise of Robin Hood he will temper his generosity to the lower-paid by announcing tax rises for high- earners.
Steve Tancock, director of the Maidstone office of Smith & Williamson, the accountancy and financial services business, said a “spend, spend, spend” report would be Prime Minister Gordon Brown’s biggest U-turn of his political career.
Tax cuts had to be paid for. “The pre-Budget report may therefore prove to a Robin Hood event where the Government tries to redistribute wealth, “ he said.
He is likely to shed caution and scatter money around in a fiscal stimulus designed to ease the credit crunch and help firms and individuals weather the recession.
The rate of Vat is likely to drop from 17.5 per cent to 15 per cent, a possibly temporary move that would not reduce food prices because most items do not bear the tax.
The aim is to stimulate spending in the shops, especially in the run-up to Christmas. However, with many people worried about their job security, it may not tempt many more shoppers back to the High Street.
Income tax could well fall, although that too would be temporary, with an expected rise in tax rates for the wealthy, perhaps after the next general election.
A planned rise in corporation tax (from 21 per cent to 22 per cent) may be delayed, and the hated abolition of relief on empty properties could be scrapped. A planned 2p increase in fuel duty may also be deferred.
The employers’ body the CBI called for immediate action to protect jobs, which could include a reduction in National Insurance.
Director general Richard Lambert said: “There are also some relatively quick and painless things the government can do that will provide an immediate boost to business, such as scrapping empty property rates, a temporary freeze on business rates and bring forward some elements of planned capital spending.”