Accountancy Age, Accountancy Age, Tuesday 25 May 2010 at 16:07:00

Office of Tax Simplification mentioned in Queen's address today alongside taxrises and public spending cuts

Plans for an independent Office of Tax Simplification, which would suggestreforms to the tax system, have been included in the Queen's Speech.

The address sets out the Lib-Con coalition's plans for the next 18 months.

The simplification programme provides specifically for "a significantincrease in the personal allowance for income tax" with the longer-term aim ofraising the allowance to 10,000.

A National Insurance Bill will increase rates and thresholds to raise 9bnfrom April 2011 in a way intended to ensure "most people" are better offcompared with the Labour government's proposals.

There are plans to review the raising of the pensions age to 66, possiblydoing so sooner than between 2024 and 2026 as previously planned.

And there is the possibility that proposals for further devolution of powersto the Scottish Government- to which Labour was reluctantly committed- may omitthe flagship plan to give the Scottish Parliament power to raise or lower thebasic rate of income tax in Scotland by up to 10p.

Business groups broadly welcomed the Queen's Speech, but demanded thegovernment provided more detail.

John Cridland, CBI Deputy Director-General, said companies would needclarification.

?Businesses are greatly encouraged by the prospect of a five-year roadmap forreform of the corporation tax system," Cridland said.

"Certainty, clarity and simplification would be welcomed.?

Cridland added that the partial reversal of Labour's 1p hike on employersnational insurance contributions was welcome.

"NICs are a tax on jobs and reducing next year?s increase to the employers?contribution is the right move at a time when we want to encourage businesses tocreate jobs. This is good news for [companies] of all sizes,? Cridland added.

Finance providers also weighed into the issue warning the raid on publicspending was a double-edged sword.

Edward Rimmer, UK chief executive at specialist business finance provider,Bibby Financial Services, said:

?It is encouraging to hear that the coalition Government's first priority isto ?reduce the deficit and restore economic growth?. However, plans to do this -mainly by cutting spending rather than increasing tax - are perhaps a doubleedged sword for UK businesses.

The Chancellor's plans to reduce "wasteful spending across the public sector" wiould have a delayed impact on the economy, not least the constructionindustry which relies so heavily on Government spending, Bibby added.

The Forum of Private Business "hoped the measures outlined in the Queen?sSpeech would go some way to getting the nation?s finances back on track withoutjeopardising recovery.

?As the Forum has already argued, the compromise reached over NationalInsurance Contributions isn?t ideal and will still create a bureaucratic burdenfor smaller companies," said the FPB's campaigns chief Jane Bennett.

"However, it is preferable to the larger increase previously proposed by thelast Government."

Bennett said there was nothing in the Queens Speech to unduly worry smallbusinesses but said they would be in the dark unless they received more detail.

?However, business owners will be in something of a state of limbo until June22, when the Chancellor will hopefully outline fully detailed taxation andspending policies in his Budget." Bennett added.

Further reading:

Firmsreact to Lib-Con tax plans