Ken Brotherston, CEO
GRS Kinsey Allen
"The announcement of the higher rate of tax for bonuses for top earning bankers today has inevitably led to claims of a massive brain-drain of our best talent. Whilst it is clear that recent changes to tax allowances and rates now may make the UK less competitive, the key question, at least in the short term is: where will they go? In considering whether a candidate will relocate you must always consider a whole host of personal factors: a spouse's career, schools, climate, age of parents, language barriers, social life and so on. The idea that a senior executive will quickly and easily up sticks to another country is simply not true and the government know this. ”
Stephen Gifford, chief economist
Grant Thornton
"The chancellor failed to pull a rabbit out of the hat to restore much needed confidence both home and abroad. His PBR was largely neutral for 2010-11 as expected but started to put the pressure on with tax rises of £3.5 billion in 2011/12 and £5.1 billion in 2012/13. But there was little detail behind his projections and considerable reliance was placed on the economy recovering quickly.
"With the UK the only G20 country whose economy is still in recession, there is a serious risk that tax revenues may not be as forthcoming as expected. Spending cuts are notoriously difficult to implement quickly which means that the next government (whichever party) will be in a very tricky position if this were to happen".
"The chancellor today put the squeeze on higher earners and bankers. Although well intentioned, it may have the unintended consequence of harming the UK's competitiveness. In such an interdependent global economy, businesses and individuals can easily invest or relocate elsewhere. It remains to be seen whether these tax rises will lead to an exodus of talent offshore or whether high earners knuckle down and accept the new reality."
Richard Lambert, director-general
CBI
"A headline-grabbing tax on bankers' bonuses may have populist appeal, but the government needs to take care not to put the financial services sector at a comparative disadvantage internationally. The threat of an exodus of talent is real."
Derek Leith, head of tax
Ernst&Young, Scotland
"As predicted the PBR contains further changes to UK oil and gas tax regime – albeit these are more a refinement of the measures announced in the April budget and contained in Finance Act 2009. These changes demonstrate the continuing engagement between industry and HM Treasury on oil and gas fiscal policy, and more importantly that the Treasury is willing to take on board feedback from industry. In itself that is a good thing, and something not to be taken for granted."
Michael Carter, partner
Addleshaw Goddard LLP
"Most of the press coverage of the Pre-Budget Report (PBR) will, no doubt, cover the Bank Payroll Tax. However, of far more concern to all employers and employees will be the proposed increase to employer's and employee's national insurance contributions (NIC) from 6 April 2011, which is on top of the proposed increases announced in the 2008 PBR, and effectively doubles those changes proposed in the 2008 PBR. The announcement will, when added to those previously announced, mean that employer's NIC will rise from 12.8% to 13.8% and employee's rate will rise by 1% from 6 April 2011. These changes will apply to all employers and employees who pay NIC (essentially those earning more than £97 per week) This will mean that, for example, those employees on incomes over £150,000 will see their marginal rates (for income tax and NIC) rising from 41% now to 52% from 6 April 2011.
This is an additional tax burden on employers and employees, which was not highlighted by The chancellor in his speech. NIC is again being used as an easy means of raising tax income from employers and employees. I would suggest that everybody, save for perhaps politicians, would benefit from the amalgamation of NIC and income tax so we have real clarity and everybody can clearly see tax changes. In everything but name this is a 1% increase in income tax."
David Coats, associate director
The Work Foundation said
“The guarantee of a job after six months without work to all those aged under 25 is a bold policy and is exactly what The Work Foundation called for in our submission to the Chancellor. Keeping young people in touch with the labour market is the right thing to do in these challenging times.
“Of course the Chancellor had a difficult balancing act to perform – continuing to support economic recovery while making credible commitments to reduce the deficit. This is a good, measured package that offers hope to both business and the unemployed. If the world economy stays on course then the UK can look forward to a slow but steady recovery in 2010.”
