With the general election less than 24 hours away, it suddenly occurred to me that while a great deal has been written about tax and fiscal policy arising as a result of any one party forming a Government, very little has been said about what the tax landscape might look like in the event of a hung parliament.

Although the last time anyone had to consider this I was running around the play ground in short trousers, the simple answer to this would appear to be that all of the parties bicker and barter over decisions and policies until they all get fed up with it and call another election. But in the meanwhile some attempt will have to be made at running the country, so I have taken a little time to see what common ground exists in the manifestos of the three main parties that might form the basis of tax policy.

The first thing to catch my eye is that all parties are promising “fairness”, LOTS of fairness which in my experience is political code for you’re about to wave goodbye to more of your hard earned cash! To their credit the Lib Dem and Labour manifestos are more committal on the subject stating that taxes will rise whereas the Conservatives propose the reversal of the planned NIC rises and a package of measures to support small business, while trying to bring the country’s borrowing under control through efficiency savings.

While all parties have undertaken to find public sector efficiencies, the problem here, as any accountant will tell you, is that you can only go so far with cost cutting before you reach a point beyond which you can go no further and until UK Plc can trade its way out of the doldrums the only recourse a future Prime minister will have is to increase taxes.

Without putting myself or you the  reader through the ordeal of regurgitating all of the current figures on the economy and borrowing, let’s just say the problem is big (the biggest in fact since the last war) so any tax rises will have to be big. Although we have seen recent tax rises for the very wealthy this will not recover enough revenue to fix our problems and a very broad based tax rise in VAT, Income Tax or National Insurance will be necessary to raise the necessary cash.

It’s anyone’s guess of course, but for my money I would expect one of the first significant tax hikes to be an increase in the rate of VAT. This is because it has not been ruled out in any manifestos and could perceivably be sold to the electorate given it doesn’t apply to essential items such as food and children’s clothing etc, it doesn’t affect registered businesses who reclaim VAT and of course the consumer has no ability to avoid this tax.

What else awaits us will remain to be seen although it seems difficult to see how we will not be entering a period of austerity. In the interests of neutrality I wish all of the parties good luck – it looks like they’re going to need it!

Download the Tax Return Aide-Mémoire here