Budget 2012: Osborne to announce £2.69bn in tax rises, Capital Economics predicts

George Osborne’s third Budget as UK chancellor is likely to include tax rises that net the government more than £2.6 billion, according to forecasts by Capital Economics.

George Osborne
George Osborne

The independent macroeconomic research consultancy’s Budget checklist highlights seven tax rises that the chancellor could unveil at 1230 GMT today, which would raise an additional £2.69 billion a year for the public coffers.

Higher council tax bands would gain £1 billion in revenue, while cutting pensions annual allowance to £40,000 would have a £600m benefit. Lifting stamp duty for houses worth more than £2m to 7% would raise £400m and tackling stamp duty evasion could net £300m.

An additional £300m could be raised through reducing pension tax relief from 50% to 40%. An extra 1% in alcohol duty would benefit government finances by £60 billion and £30 billion could be gained from adding 1% to cigarette duty.

Capital Economics also says Osborne may announce tax cuts that cost a total of £6 billion. These include raising personal tax allowance to £9,000, cutting the 50% income tax rate to 45%, taking an extra 1p of corporation tax, scrapping April 2012’s 5.6% rise in business rates and axing August’s 3p per litre increase in fuel duty.

The group also says the chancellor could increasing government spending with new measures to help business and reductions in the cut to child benefit, while no further cuts in spending are likely to be unveiled.