Tax rise would hurt Labour ‘beyond repair’

A tax rise in next week’s Budget could prove fatal to Labour’s chances of being re-elected, according to the results of the latest Accountancy Age/Reed Accountancy Big Question.

A resounding 83% of finance directors said a rash tax hike by the chancellor would seriously hurt the government at the ballot box. And some warned that this did not just apply to an increase in direct taxation, but that voters would also see through any rise in ‘stealth taxes’.

Of those who believed a tax rise would have a negative affect, Nigel Morland of law firm Ashurst Morris Crisp said the government was ‘already damaged’ by previous rises. ‘Further rises will damage them beyond repair,’ he added.

Paul Tonks, of recruiters Hill McGlynn & Associates, called for more honesty from the chancellor. ‘He keeps raising taxes and as far as I know everyone can spot a stealth tax at 20 miles,’ he said.

Quentin Anstruther-Norton, who gave a neutral reply, argued that indirect taxation would only reinforce the view of spin over substance.

Others called on the government to ensure the current tax take was spent more wisely and said more efficiency in the public services was needed.

Several anonymous respondents argued that the chancellor could introduce a budget tax hike and survive: ‘A significant increase in taxes will not be enough to put the Conservatives in. Tony Blair is already untrustworthy, but Labour has a clear lead,’ one respondent said.

Another argued that any tax rise would be indecipherable. ‘The chancellor will not raise income tax, which is politically sensitive. Instead other taxes will be raised, which accountants will struggle to understand, let alone the general public.’

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