Chancellor in Shock U-Turn over 2012 Budget

The Chancellor George Osborne has made 5 Budget U-turns to date, the most significant being the reversal of the pasty tax, VAT on static caravans, Vat on refurbishments to listed buildings and most recently the decision to revoke the cap on charitable donations. 

The cap on tax reliefs is a new scheme that was introduced in the 2012 budget whereby tax relief is limited to the greater of £50,000 or 25% of income. I attended a tax update meeting at the time the budget was announced and there were several eyebrows raised once it became clear that the cap would include charitable contributions.  Surely the chancellor must have expected fierce opposition when introducing a cap that could penalise people for making charitable donations. I would have expected the Chancellor to have planned for this and to have laid out strong arguments as to why he is enforcing this policy. Unfortunately, this does not appear to have happened and the subsequent reversal of this policy is extremely damaging to the Chancellor and the Conservatives.

During a time of economic crisis in Europe, the Budget has failed to address the fact that we are in recession. The only real positive highlights from the Budget are the Lib Dem’s proposal to increase the personal allowance up op £10,000 by 2015 and the decision to reduce the corporation tax rate. In a Budget plagued by a record number of leaks, it is disappointing to note that the few surprises announced by George Osborne appear to have been ill thought out and have been subsequently reversed. 

We have been hoping for some time now that the government would have some clever plan to tackle the recession, such as cutting taxes or promoting growth nearer the election. However, on this evidence we are beginning to have second thoughts.