Tax cuts to boost the economy are likely to be included in the Pre-Budget report which is due to be unveiled on Monday, 24 November.
In an interview on GMTV yesterday, Gordon Brown hinted at possible future tax cuts funded by a temporary increase in borrowing with the aim of getting the economy “moving again”.
There have already been reports that the chancellor, Alistair Darling, is expected to delay some increases in vehicle excise duty (VED) for higher emission cars that were originally unveiled in the Budget and scheduled due to come into effect next April. The changes would have meant that cars bought between 2001 and 2006 would have faced above inflation increases in VED.
A spokesman for the British Vehicle Rental and Leasing Association said this expected u-turn would be of little help to employers as it would only affect older vehicles and not apply to new fleet purchases. However, he admitted that it could help employers to sell on used vehicles.
The Conservative Party leader, David Cameron, today revealed the tax cuts his party would make if in power. He unveiled plans to offer national insurance contribution (NIC) breaks to employers which take on new staff who have been unemployed for three months or more worth up to £2,500 per person per year.
John Philpott, chief economist at the Chartered Institute of Personnel and Development said: “The Chancellor should give serious consideration to adopting some of these ideas in the Pre-Budget report.”
However, he doubted whether incentives based around recruitment would have a big impact when employers were facing a serious economic downturn.
“It is because of potential [issues[ such as [this] that the CIPD would like policy makers to put greater emphasis on tax cuts to help employers facing difficulty in tough times to retain workers who are at risk of redundancy.”
The Liberal Democrats have also come out in favour of tax cuts, but has aimed proposals specifically at the low-paid.