For his second Budget speech Chancellor George Osborne has promised a finance bill that is "unashamedly pro-growth, pro-enterprise and pro-aspiration," as he seeks to move the UK economy from rescue mode to reform mode.Mindful of headline writers preparing to accuse him of pandering to "fat cats" he may introduce some measures aimed at curbing some of the greater excesses of the jet set while doing what he can to reduce the tax burden for those companies that have yet to fly off to countries with gentler, simpler tax regimes. Fat cats and high fliersWell-heeled fliers will need deeper pockets if Chancellor George Osborne slaps a new tax on private jets in tomorrow's Budget, Lee Wild reports.The widely reported move - nicknamed the Learjet levy - is likely to try and replicate Air Passenger Duty (APD), which private jet passengers currently do not have to pay.APD is currently levied at eight rates of between £22 and £85 on commercial trips, depending on the class of travel and distance travelled. Osborne's move will form part of a bigger crackdown on tax avoidance, which he reckons could boost Treasury coffers by an extra £1bn a year. Oriel Securities, however, says airlines and operators may try and pass any additional taxes onto ordinary passengers, already hammered by a mix of flight taxes and fuel surcharges."Given that chartering even a small private jet can cost approximately £10,000 per hour the level of APD imposed by the chancellor would have to be quite high for demand to be negatively affected, in our view," the broker believes.Banks threaten to migrateEven though the oil price rise has put more money in the government's coffers than it was expecting, there is little prospect of the chancellor cutting income tax rates, even though he is probably itching to do so. However, an acceleration of his previously announced plan to cut a penny per pound off corporation tax each year is possible, though a bit of a long shot, writes John Harrington.Banking giant Barclays may have put the wind up the coalition government with its thinly veiled threat to move its headquarters (HQ) to New York, and this may prompt the chancellor to act faster on cutting corporation tax. Quite why Barclays would want to move to the financial capital of the nation that passed the Sarbanes-Oxley act, a law that has seen a flood of US companies choosing to list in the UK to escape the excessive rigours of that act, is another matter.Perhaps new chief executive officer Bob Diamond is worried that the threatened Learjet levy will make it dearer for him to fly over to see his beloved Boston Red Sox baseball team. HSBC has also been dropping dark hints about moving its HQ to Hong Kong, so perhaps this is a threat that the government should take seriously. Osborne may have some wiggle room because the Office for Budget Responsibility, the "arms length" government body appointed to make independent forecasts for the chancellor, may be about to revise down the public sector borrowing requirement for the current financial year from £148.5bn to somewhere around £140.2bn, according to the Ernst & young ITEM club, a forecasting agency that uses the Treasury's model of the UK economy.On the other hand, Osborne has been very keen to remind everyone that he is still wearing the hair shirt - figuratively speaking, of course, as the man is a millionaire and the heir apparent to a Baronetcy, after all - so he will probably take the view that a borrowing requirement of around £140bn is still an eye-wateringly large IOU, even for a member of the British aristocracy, and that this is no time for frivolous generosity.How well a cut in corporation tax will play with the voters at a time when libraries and Surestart centres are being shut down across the nation is a political decision rather than an economic one for the chancellor. A recent poll suggested that 36% of the British public is satisfied with Osborne's performance as chancellor, with 45% dissatisfied. Cynics say that if a chancellor has a positive approval rating at a time when the public finances are in the sort of mess he inherited then he probably is not doing his job properly.It is, however, in the Conservative party's DNA to put its faith in business to lead the company to prosperity, and there are certain to be initiatives designed to present this as a "budget for business".The creation of ten new enterprise zones in the Midlands and the North is widely expected, in an attempt to revitalise depressed areas of the country. Business rates may also be cut, with local authorities given greater leeway to decide how and where money raised from business rates should be spent.
Last checked at 
