Reactions to the major fiscal announcement centre on bank taxation, the independent green investment bank and plans for a slimmer HMRC budget
and Ernst & Young
have all weighed in with their views on the government’s Comprehensive Spending review, announced on Wednesday 20 October.
Top of the list for PwC and KPMG was the coalition’s plan to step up taxation of banks. PwC’s financial services tax partner Matthew Barling welcomed the government’s awareness of competitiveness issues that could arise if the UK’s levy was unduly harsh and banks decided to move elsewhere. However, said Barling: ‘Whether their views on the balance between further taxation of the sector and preserving a competitive environment are shared by the banks themselves remains to be seen.’
Barling’s KPMG counterpart, Tony Urwin, said: ‘The territorial scope of the UK bank levy remains wider than that of the equivalent French and German levies. While the Treasury and Her Majesty Revenue and Customs (HMRC) have addressed some of the concerns raised during the consultation process, [further legislation] will impose a significant additional compliance burden on banking groups.’
Deloitte public sector expert Michael Cullen turned his attention to £1bn plans to start a green investment bank (GIB). The issue, he said, ‘is causing some controversy – but it remains to be seen what the total will be, once asset sales and private sector involvement are clarified.’ The 2013/2014 implementation timetable, he added, ‘is a realistic and positive signal for the green economy, alongside various other announcements such as funding for proving carbon capture and the green deal.’
Meanwhile, Ernst & Young tax partner Patrick Stevens assessed the potential impact of planned budget cuts to HMRC. ‘The chancellor announced that HMRC would be expected to make a series of hefty cuts to its budget, achieved in part through efficiency savings of 25%,’ he said. ‘These proposals will demand high levels of skill at change management, a review of HMRC's operating model and continued and sustained investment in IT.
‘The consequences of getting it wrong,’ he added, ‘would fall primarily on taxpayers – both through additional financial costs and huge inconvenience.’