Overview

Whichever party wins the Election, there can be no doubt that the new Government will have to deal with the perilous state of the public finances. Estimates from the Office for National Statistics indicate that public borrowing will rise to £174 billion this year (12.4% of GDP) and tax revenues have fallen by an estimated 20%. All parties have agreed that the deficit needs to be tackled but they have disagreed on the methods and means of how to tackle it.

Labour has indicated that the best way to deal with the problem is through legislation and they have promised to halve the deficit within four years. David Cameron, however, has said that "getting the deficit under control will make or break my Government" and has pledged to focus on reducing waste and making targeted cuts to public spending, rather than pursuing aggressive tax rises. The Liberal Democrats have pledged to cut public spending, increase taxes and, in a slightly different tack to the Labour and the Conservative parties, provide HMRC with increased powers to grapple with tax avoidance and tax fraud.

It is almost inevitable that both public spending cuts and tax rises are on the horizon but the main parties all have different ideas on the most efficient way to achieve these objectives.

This note by Osborne Clarke provides an overview of where the Labour, Conservative and Liberal Democrat parties stand on various tax issues and the implications their proposed tax policies will have for both business and individuals.

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