The three main political parties are facing a demand to announce and debate clearer tax policies well in advance of the next general election.
In a report published today, public accounting firm BDO Stoy Hayward assesses the options available to help recoup the Government’s £175 billion fiscal deficit. These include increases to National Insurance contributions, applied to employers and employees, which the company predicts would generate £10 billion.
The BDO document – entitled Time to Break the Silence? – claims that such a move would most likely to be taken by Labour, should the party secure a fourth term in office on or before 3 June next year.
Judging by previous behaviour, the Conservatives would probably target indirect taxes, and a 2.5% rise in the standard rate ‘would not seem out of the question’ from a future Tory government.
In the somewhat unlikely event of the Liberal Democrats securing power in 2010, the party may court controversy by reducing or even abolishing the capital gains tax exemption applying to the sale of principal private residences, forecasts BDO.
The company has insisted, however, that all three political groups must provide clear tax policies now, in the long run-up to the next round of nationwide voting. Time to Break the Silence? criticises the lack of current debate about key taxation policies, calling the perceived procrastination over a debate about tax levels ‘unacceptable’
‘We believe that the public deserves to be fully engaged in the process of debating the key taxation priorities well before the election is called,’ said senior BDO tax partner Stephen Herring.
The electorate is becoming increasingly alive to the fact that there will be both cuts in public spending and increases in taxation. However, voters need to have a clear idea about the level of pain they are expected to endure and where exactly it is going to hurt.’
He added: ‘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.’