Chancellor John Healey goes into Wednesday's Budget with his room for manoeuvre much smaller than it was six months ago, according to BBC reporting. Economists cited believe the buffer held to meet the government's fiscal rules and reduce borrowing may have halved, from around 24 billion pounds to as little as 11 billion, partly because of higher borrowing costs. Labour's 2024 manifesto promised not to raise income tax, VAT or National Insurance rates, so the search for revenue has turned to other taxes.

Taxing banks more

One option under discussion is a higher tax on banks, whose profits have grown. Raising the banks' corporation tax surcharge from 3 per cent to 5.5 per cent could bring in an extra 1 to 2 billion pounds a year, according to Tax Policy Associates. Banks warn that heavier taxation could discourage investment in Britain and cost jobs, while lower shareholder distributions would follow at first. Savers could feel an indirect effect through pension holdings.

Doubling the gaming machine tax

A second idea is to double the tax on electronic gaming machines in betting shops and adult gaming centres, from 20 per cent to 40 per cent. Former prime minister Gordon Brown has urged the move, and the Social Market Foundation puts the yield at 275 million to 460 million pounds, depending on how players respond. One in four people playing casino games on such machines gamble at risky or harmful levels, according to the reporting. The industry warns that higher taxes could force betting shops to close and reduce funding for horse racing. Both options remain proposals under discussion, not confirmed Budget measures, and the final package will only be known when Healey speaks on Wednesday.

Sources: BBC News via World Right Now, The Sun