BarCap’s chief UK economist Simon Hayes, in an article for The Times, said the reality is that – despite the rhetoric and protests – only 20,000 public sector jobs are being cut over the coming year with the worst yet to come.
This year’s job cuts will be just 5 per cent of the planned 400,000 losses with 10 times as many jobs expected to be cut in 2014-2015 alone.
Tax increases are in place but actual spending cuts have really yet to be felt, he said.
“The hope is that by 2014-2015 the private sector will be growing strongly enough to absorb these workers, although on current trends this seems doubtful”, wrote Mr Hayes.
At the same time, HMRC is casting its net further overseas in an attempt to target Swiss bank accounts.
A “legitimise and forgive” deal aimed at Britons with hidden wealth in Swiss bank accounts hopes to raise at least £3 billion for the Treasury over the next three to four years, according to reports.
If successful, HMRC will make British citizens with hidden Swiss assets pay tax at 50 per cent although they will reportedly avoid any liability on past unpaid tax by payment of a one-off, “no names, no pack drill” levy.
It is expected to draw criticism for being overly lenient to wealthy tax dodgers and evaders while ordinary people face stiffer penalties for lesser amounts.
HMRC argues it will bring in much-needed additional tax revenue and further close loopholes.
Meanwhile, tax experts asked by the House of Commons Treasury committee to examine Chancellor George Osborne’s March Budget for “fairness, support for growth, certainty, simplicity, stability, practicality and coherence”, singled out a small but influential and vocal group increasingly identified and targeted by Labour leader Ed Miliband and his strategists as the “squeezed middle”.
They said: “There is clearly a significant fairness issue over the increased tax burdens imposed – whether they are being borne fairly. We do have to note a considerable increase in the effective tax burden of those on incomes in the £40-50,000 bracket when tax credit and child benefit are taken into account. A considerable number of single-earner households where the earner is a higher-rate taxpayer, are in the fourth income decile – in the lower half of the income distribution.”
