UK chancellor Rishi Sunak is expected to announce a rise in taxes to pay for the ever-increasing coronavirus pandemic bill on 3 March.
It is unknown what taxes will be changed, but advisers have pleaded with Sunak to focus the budget on growth.
Financial services giant Aegon has surveyed 202 advisers and found that an overwhelming majority (82%) believes the focus of March’s budget should be on stimulus and growth measures.
Some 78% believe that tax rises now would risk harming the nation’s economic recovery from the pandemic, however, by contrast, just 37% agreed that urgent action was needed to balance the book at this point.
Nigel Green, chief executive and founder of DeVere Group, said: “Now is certainly not the time for putting further pressure on job and wealth-creating businesses and individuals.
“It might further curtail investment and demand at the very time the country needs it most to rebound from the worst recession in 300 years. The chancellor should be implementing policies for long-term, sustainable economic growth, rather than taxing it into the ground.”
Agreement
While advisers were generally unsupportive of any tax rises now, when asked what taxes should be increased, 43% said they would support a rise in capital gains tax (CGT) rates.
This was significantly ahead of support for other areas like increases to income tax rates for higher and additional rate taxpayers (33%), or the introduction of a health and social care levy (27%).
Advisers were not favourable towards a wealth tax, as only 15% said this was a good idea.
‘Fragile’
Steven Cameron, pensions director at Aegon, said: “The chancellor was no doubt hoping that by March the nation would have come through the worst of the pandemic, and while the vaccination programme gives reasons for optimism, it’s only once the way out of current lockdown restrictions are in place than the full economic impact will become clearer.
“It’s for this reason that advisers have cautioned against tax hikes at a point where the economy is still fragile and they believe that revenue raising measures now could be harmful.
“While advisers believe the focus for the time being should be on stimulus measures, it’s clear that, as the economy strengthens, calls will grow to recoup some of the huge amounts of spending on supporting jobs and businesses.
“While no one ‘likes’ tax increases, it looks like CGT is one area where there is a greater support for reform. But even this is not without its controversies as, while the tax is typically paid by the wealthiest individuals, it could also affect small business entrepreneurs who the government is keen to encourage.
“When it comes to tax increases, there are rarely easy wins for the chancellor.”
