There is an established rhythm in the run-up to the budget each year, in which the Tax Strategy Group papers is an important marker. These are written by senior civil servants, scoping out possible tax and welfare changes for the Government. As such they are a mix of annual analysis of what basic measures would cost, an assessment of what the Government has said it would do in its programme and, in a small number of cases, clear recommendations from public servants.
Some of the themes are by now familiar. One is the narrow tax base, increasingly reliant on a small number of corporation tax payers and the income tax paid by the staff the big players employ. A second is the significant cost of adjusting the income tax system for inflation which, if it is done this year, will leave little enough scope for other measures.
The third and related issue is that making changes elsewhere – for example restoring the 9 per cent VAT rate to hospitality – will thus require difficult choices to be made elsewhere. Despite the big budget surplus, the actual room for manoeuvre in many cases is limited enough. And where concessions may not be that costly – for example in the case of capital taxes charged on inheritances and capital gains – this is more a reflection on the small amounts that these raise in the first place.
The Government will be well aware of the overall shape of the choices facing it and the papers give some hint of civil service advice, notably against restoring the 9 per cent VAT rate. But there are signs in the papers that the civil servants are being cautious about what they write down, knowing that it will be published. And this reduces the insights given into the real policy trade-offs.
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In terms of tax, though, it is clear enough. If the Government increases income tax credits and bands enough to allow for inflation - and trims elsewhere to help the lower paid - there will be little enough left. Enough, no doubt, for a few pre-election headlines, but not for anything of real substance.