This follows in the wake of various policy moves by Labour, including the announcement of a new 50p higher band of income tax for those earning over £150,000 a year, the claw-back of personal allowances for those earning over £100,000, and the restriction of tax relief on pension contributions for those earning over £150,000. Separately, the firm predicts that future profits from the banking sector will come under scrutiny. MacIntyre Hudson suggests that the Chancellor could place a limit on the ability of firms to carry forward trading losses so as to increase the tax take from banks’ future profit streams when they return to health. “The government may have a lot to lose economically but it has everything to gain politically,” comments Nigel May, tax principal at MacIntyre Hudson. "The Chancellor will see little point in announcing serious, unpopular increases during its last-ditch attempt to convince the electorate to grant it a fourth term. Instead, we are likely to see further attacks on the better-off, the cautious widening of the tax base and a few business-friendly measures that will enable the government to trumpet its success in helping along the recovery. "In so doing, the critical policy challenge of how to curb the public deficit without choking off the fragile recovery will be given little more than lip-service – the Chancellor has already made it clear he does not intend to announce significant further tax measures." May reckons Labour will “provoke” the opposition with more tax increases on high earners. “These politically-charged moves force the Conservatives into a catch-22 situation: accept the need for rises and risk dissent in the Conservative ranks, or oppose the rises and be painted as a party out of touch and out to protect the wealthy. Messrs Brown and Darling will be curious to see how far they can push these sabotage tactics ahead of next year’s electoral showdown,” he says. Here are MacIntyre Hudson’s full list of predictions for this year’s Pre-Budget Report: Introduction of a new wealth tax of 0.5 per cent on personal fortunes in excess of £1m: 3-1 Introduction of a lifetime restriction of £1m on inheritance tax (IHT) exemptions for business and agricultural property: 4-1 Increase in the main rate of capital gains tax (CGT) to 25 per cent: Evens Restoring the personal allowance for those earning over £100,000: 2-1 Reducing the starting point for 50 per cent income tax to £110,000: Evens Extend for one year the loss carry-back scheme for businesses: Evens Introduce six-year limit to carry forward of trading losses for tax purposes: 6-4 on Announcement of a 25 per cent flat rate of corporation tax, phased in by 2013: 3-1 Deferral of the January VAT rise by one month: 5-1 Reintroduction of Crown preference: Evens Increase in climate change levy, while exempting all non-carbon technology: 3-1 Delay in the next fuel duty rise, until after the 2010 election: 2-1 Extension of the £175,000 stamp duty freeze for one year: 4-1 Related articles:Would a flat tax solve our economy woes?
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