New Government dampens tax hike fears

The new coalition Government has moved to dampen fears of imminent tax rises in the emergency Budget, due within 50 days.

The "coalition agreement", published this afternoon, makes no mention of particular polices around licensing, below-cost sales or other alcohol-related issues. However, a more detailed final version will be released "in due course".

The new agreement promises an "accelerated reduction" in the deficit over the course of a Parliament. However, the main burden will be "borne by reduced spending rather than increased taxes".

It gives some comfort to the industry, with trade experts predicting an imminent rise in VAT and no favours on alcohol duty.

The coalition Government agrees to stop "Labour's proposed jobs' tax" by increasing employer national insurance thresholds.

It proposes cuts of £6bn to "non-front line services" — and suggests some savings made from these cuts can be used to support businesses. One support measure suggested is cancelling backdated demands for business rates.

When it comes to capital gains tax, the new alliance states that it will have "generous exemptions for entrepreneurial business activities".

The agreement says the flow of credit to "viable" small and medium businesses is a "core priority".

The Government will "include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks".

The new Government will "work to limit the application of the Working Time Directive", which limits employees from working more than 48 hours per week - the UK currently opts out.

National ID cards - billed by Labour as useful useful ID for proving age when buying alcohol - would be scrapped.