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Budget 'to hit gas guzzlers hard' Budget 'to hit gas guzzlers hard'
(about 1 hour later)
Gordon Brown is expected to radically raise the tax on larger-engined cars in Wednesday's Budget. Gordon Brown is expected to raise taxes substantially on larger-engined cars in Wednesday's Budget.
Some reports suggest that road tax on the least fuel efficient cars will double to about £400 a year. Some reports suggest that road tax on the least fuel-efficient cars will double to about £400 a year.
At the same time, business groups have urged Mr Brown not to introduce more company taxes.At the same time, business groups have urged Mr Brown not to introduce more company taxes.
Businesses are paying almost £12bn more in tax in 2008/9 than they were when Labour came to power, the Engineering Employers Federation said. Businesses are paying almost £12bn more in tax in 2008/9 than they were when Labour came to power, the Engineering Employers' Federation said.
Surging taxes have hit manufacturer profitability hard and turned many companies away from the UK, it added.Surging taxes have hit manufacturer profitability hard and turned many companies away from the UK, it added.
BROWN'S BRITAINA guide to the British economy under Gordon BrownIn graphicsBROWN'S BRITAINA guide to the British economy under Gordon BrownIn graphics
The Budget's green measures fall short of those demanded by environmental lobbyists, some of whom have called for road tax to be raised to over £1,000 for polluting vehicles. The Budget's green measures may fall short of those demanded by environmental lobbyists, some of whom have called for road tax to be raised to more than £1,000 for the worst polluting vehicles.
Friends of the Earth called for substantial measures to tackle climate change if Mr Brown was to leave a "green legacy as chancellor".
Good news, bad newsGood news, bad news
Consultants Ernst & Young believe Gordon Brown is unlikely to introduce any business tax cuts. Consultants Ernst & Young believe Gordon Brown is unlikely to introduce any business tax cuts, despite calls from groups such as the CBI.
"The best we can hope for is a programme of reduction over the course of the next five years but we are far more likely to see no action at all," the group said in a report on its predictions for this week's budget. "The best we can hope for is a programme of reduction over the course of the next five years, but we are far more likely to see no action at all," the group said in a report on its predictions for this week's Budget.
Ernst & Young's report also predicted there would be little on offer that would be welcomed by individual tax payers. It also predicted that there would be little on offer that would be welcomed by individual taxpayers.
Anyone thinking that the chancellor will use his last Budget to reduce the tax burden is likely to be disappointed Patrick Stevens, Ernst & Young
"The good news is that there are unlikely to be any significant tax increases for individuals," said personal tax partner Patrick Stevens."The good news is that there are unlikely to be any significant tax increases for individuals," said personal tax partner Patrick Stevens.
Brown certainly packs his bags at an opportune time Peter Spencer, Ernst & Young
"The bad news is that anyone thinking that the chancellor will use his last Budget to reduce the tax burden is likely to be disappointed.""The bad news is that anyone thinking that the chancellor will use his last Budget to reduce the tax burden is likely to be disappointed."
Mr Brown is widely expected to tighten the rules on inheritance tax in this, his 11th, Budget . Mr Brown is widely expected to tighten the rules on inheritance tax in this, his 11th Budget.
Meanwhile, with property prices continuing to rise many believe he will act on the issue stamp duty - currently buyers do not pay the duty on properties priced below £125,000. And with property prices continuing to rise, many believe he will act on the issue of stamp duty. Currently, buyers have to pay the duty on properties priced above £125,000.
However he may also offer a few concessions to property owners who are prepared to "go green". However, he may also offer a few concessions to property owners who are prepared to "go green".
Ernst & Young predict the chancellor will set out more details on the stamp duty land tax exemption for the purchase of so-called "zero carbon" homes, which he first mooted in his Pre-Budget report. Ernst & Young predict the chancellor will set out more details on the stamp duty land tax exemption for the purchase of so-called "zero-carbon" homes, which he first mooted in his pre-Budget report.
'Missed opportunity' There is also speculation that Mr Brown will offer tax incentives to encourage people to install solar panels, wind turbines and other carbon-free sources of energy in their homes.
Widespread belief that the day will mark Mr Brown's final Budget has sparked a series of appraisals of his time at the helm of the UK's finances. Tory tax pledge
Shadow chancellor George Osborne accused Mr Brown of squandering a golden age for the global economy and instead wallowing in his own "self-congratulation". With Mr Brown under pressure from businesses to reduce their tax burden, the Tories have revealed they will cut corporation tax by 3p in the pound if they win the next election.
"It is the case that for the last 15 years or so the whole world has enjoyed global low inflation, globally low interest rates," Mr Osborne told the BBC. We are confident we can achieve this as part of a major reform of corporation tax George Osborne, Shadow Chancellor
"I know Gordon Brown takes credit for that - it's probably more to do with the Chinese work force." Shadow chancellor George Osborne said the Tories would reduce the headline rate of tax from 30% to 27%.
Meanwhile, former Tory chancellor Kenneth Clarke said Mr Brown had "got the public finances into a quite dreadful mess". He stressed that the measure, costing about £4.5bn, would be fully funded by eliminating capital tax reliefs currently available.
"Brown certainly packs his bags at an opportune time," said Peter Spencer chief economic adviser to the Ernst & Young ITEM Club added. Mr Osborne challenged Mr Brown to follow suit with a similar tax-cutting pledge.
Mr Spencer added Mr Brown would probably draw a line under his time as chancellor by claiming he has met his fiscal rules and is leaving the economy on track for 3% growth this year. "We are confident we can achieve this as part of a major reform of corporation tax," he told the Financial Times.
"What he actually leaves is a large structural deficit and a national tax burden rising to its highest in over 20 years," Mr Spencer added. "I would like the chancellor to do it. It's something he can and should do."
Widespread belief that the day will mark Mr Brown's final Budget has sparked a series of appraisals of his time at the helm of the UK's finances. Former Tory chancellor Kenneth Clarke said Mr Brown had "got the public finances into a quite dreadful mess".
But one economist said the economy had ended 2006 "strongly" and growth projections for 2007 and next year were healthy.
"Mr Brown will once again undoubtedly talk up the extended strength and stability of the economy under his stewardship," said Howard Archer, chief economist at Global Insight.