Comments on the Chancellor of the Exchequer’s Statement

Gareth Osborne commenting on the Chancellor of the Exchequer’s Autumn Statement, said:

“As APA expected, the Chancellor’s Statement has focused overwhelmingly upon the fiscal outlook which has deteriorated since his Budget speech. This is largely due to the reduction in the growth forecasts driven by the deteriorating European and Global economic performance. From a tax policy perspective, next week’s ‘Legislation Day’ will contain much more of interest to business.”

APA views tax policies from the perspectives of business friendliness, simplicity, certainty and fairness. Focusing upon the first two criteria, we welcome the new opportunities for businesses to win new work from the infrastructure and housing initiatives announced by the Chancellor. However, we consider that a more rapid reduction in the mainstream rate of corporation tax to the Chancellor’s target of 23%, or preferably to 20%, would have attracted more entrepreneurs and global businesses to increase their investment in the United Kingdom rather than the package of highly targeted tax reliefs announced today.

We consider it regrettable that the Chancellor has considered it necessary to restrict the 100% capital allowances in Enterprise Zones to less than a third of the zones previously announced. We are similarly skeptical of the impact of the proposed ‘Seed Enterprise Investment Scheme’ but it appears that this could also be the Treasury’s view as they are predicting that the tax cost of its introduction will only be £50 million in 2013/14 falling to £20/£25 million in later years, a trifling sum in comparison to a tax take from corporation tax of approximately £50 billion per annum.

 Both individual and business taxpayers might have feared an announcement of new taxes or broad-based tax rate increases in order to maintain the necessary reduction in the fiscal deficit. They will be relieved that the Chancellor has not felt the need to take these steps. The favourable tax changes he has announced are not broad based but will, nonetheless, be of value to the taxpayer groups concerned.

Gareth concluded: “The situation remains bleak for the individual and business. The economy looks set to bounce along the bottom and show little sign of real improvement for a further five years. This means that a whole generation of new entrants to the workplace who will have an uncertain future ahead of them and people approaching retirement who, instead of a comfortable future, will be horribly disadvantaged. It is not a peaceful future to look forward to as Christmas approaches.

APA