Budget to save the NHS

The budget delivered by Gordon Brown in 10 days' time will be the most significant in memory because the government has warned it will include tax rises to save the NHS. It is the first time in recent British political history that a cabinet has dared admit it wants to tax people more heavily, and the chancellor's job will be to extract the money.

Given this background, the opportunities for changes to benefit particular groups of taxpayers and special interest groups seem limited. But if Brown is still open to suggestions, there is no shortage of ideas.

When financial adviser RJ Temple polled nearly 600 people, presenting them with a list of measures to name as priorities, the most popular was free long-term healthcare for older people. This was supported by 60% of respondents and by nearly three quarters of those aged over 55.

Their next priorities are ending student tuition fees, backed by 37%, and higher taxes to pay for better services such as health and education, which was supported by a little over a third.

Nineteen per cent wanted saving for pensions to be more flexible and 17% wanted it made compulsory.

For small businesses, one of the chief concerns is to make it easier to deal with the tax system, according to a survey by Alliance & Leicester Banking. 22% of the 500 firms polled were worried about tax, which had displaced late payments as the main cause of complaint a year ago.

Here are some of the other suggestions from charities, campaign groups and tax experts that the Chancellor is sifting through:

Child Poverty Action Group

Martin Barnes, director, says: 'This will be a watershed budget in terms of the pledge to eradicate child poverty. The government's target of lifting a million children out of income poverty within three years can only be achieved by a significant increase in financial support for children.

'The chancellor will give some indication of the level of the new child tax credit due in April 2003. The change in support for children is radical and ambitious. More than five million families will be eligible, but a change in structure alone will not help the millions of families struggling with poverty.

'Achieving the child poverty pledge will require additional spending for families of over £5bn a year if there are to be no losers. This is less than achieved in Labour's first term, but more than some in government may wish to see the chancellor spend.

'We do not doubt the chancellor's personal commitment to tackling child poverty, but the omens have not been encouraging. The very poorest should not be forgotten. The government has been twiddling its thumbs on the social fund for too long. Stephen Byers can find an extra £300m for Railtrack shareholders, but the social fund budget, which is a third of this amount, remains woefully inadequate.

'The chancellor may say more about the Child Trust Fund and Savings Gateway [a savings scheme for low earners] although the initial enthusiasm seems to have cooled. While we support the proposals in principle, improving the social fund should come first.'

Help the Aged

Spokesman Mervyn Kohler says: 'The budget must make more resources available for social care. The government is presiding over the dismemberment of long-term care services. Not only is this morally indefensible, but it is a poor business proposition: it is producing pressure for other parts of the NHS and probably creates new demands for more intensive care for older people.'

Age Concern

Gordon Lishman, director general: 'We would like the chancellor to give some clarity to the pensions system, to enable people to have more confidence about their income in retirement. Since the government came into power it has made a number of measures to improve older people's incomes but it has become very difficult for people to understand what they are or will be getting in retirement.

In order for the government to work out a clear, consistent and effective pension strategy it must come up with its own properly researched answer to the question: how much is enough to live on? Once we have the answer, we urge the government to set targets for the reduction of pensioner poverty.

'Age Concern is in favour of an increase in spending on health. An increase in social care spending is important to ensure individuals get the appropriate support outside hospital that they need.'

Association of Private Client Investment Managers and Stockbrokers

The association wants to increase the annual capital gains tax exemption limit from profits of £7,500 to £10,000, which it says would free more than 80,000 investors from CGT liability. It also wants a move towards abolishing the 0.5% stamp duty on share transactions. A 'helpful first step' would be exemption on deals in shares of the smallest quoted companies - those quoted on the Alternative Investment Market and the Ofex market.

Isas should be simplified, and there should be a retirement Isa into which pensioners could invest up to £30,000 on retirement. The rule requiring pensioners to buy an annuity at 75 should be abolished; pensioners should be obliged to ensure a retirement income equal to the minimum income guarantee (the minimum state income guaranteed by the government).

Association of Investment Funds

Plans to scrap the 10% tax credit on dividends paid into unit trust Isas in 2004 should be scrapped. Investors should be able to transfer cash in mini cash Isas across to stocks and shares plans. The maximum annual subscription level for Isas, currently £7,000, should be changed to a number divisible by 12 to allow for equal payments into monthly savings Isas.

Stamp duty should not be payable on purchases of shares inside funds that invest in other funds. Mergers between unit trusts can also trigger stamp duty charges and these should be exempt.

National Association of Estate Agents

Stamp duty on property transactions should be reformed and put on a 'fairer' graduated structure as buyers of property in the south of England bear the brunt of the tax, says the NAEA. At present it is charged at three rates: 1% on properties between £60,000 and £250,000, 3% up to £500,000 and 4% above that level.

The NAEA suggests six rates,starting at 1.5% on properties between £100,000 and £250,000 and rising to 4% on properties worth £2m or more. No stamp duty is payable on purchases of up to £60,000 and Hugh Dunsmore-Hardy, chief executive of the NAEA says: 'We suggest that implementing a higher starting threshold would provide immediate benefit for first-time buyers, particularly now there is no longer any tax relief on mortgage interest. It would be beneficial to some communities where mobility is an important issue.'

Chartered Institute of Taxation

The institute expects to hear more from the chancellor on the planned working tax credit for lower-income families and individuals, the child tax credit and the pension credit. It says the 'many big questions still to be answered' include the number of taxpayers entitled to claim and the rates at which credits will be paid; how income for determining entitlement will be assessed; and the extent to which employers will be involved in verifying incomes to enable people to claim.

There is also uncertainty over help for people claiming combinations of credits.

Capital gains tax - an 'inordinately complex tax' - needs to be simplified.

If national insurance is increased, careful thought must be given to ensuring that the burden does not fall too heavily on any particular group of earners. 'Any change should move us closer to harmonising Nics and income tax rather than the opposite.' Employers should also be given plenty of time to update their system.

Any reform of inheritance tax will need 'full and careful consultation'.

'Let's all grow up and accept we have to pay taxes'

In the unlikely event that Gordon Brown waves his magic briefcase and cuts a penny off income tax, businessman and voluntary worker Brian Bowles will not be impressed.

'I am totally uninterested in all this yaboo stuff. If they take a penny off here and there, you know that the machinations of the civil servants will turn up in the small print and there will be a trade-off,' says Bowles, from Crewe in Cheshire.

'Wondering about whether there is going to be an extra tuppence on beer is not an adequate way of planning for the community's wellbeing.'

Bowles is happy to pay 'an extra tuppence for justice, an extra tuppence for education and an extra tuppence for the NHS'.

He is not suggesting it should mean simply adding 6p to the basic rate of income tax. Some money might be raised by higher taxes on petrol or cigarettes, for instance.

But he wants a grown-up discussion about national priorities, including 'a clearer idea of the philosophy underpinning the views of the chancellor and the government'.

It is not surprising that he is interested in the idea of hypothecation, where taxpayers are told exactly where a particular tax will be used: 'One of the reasons why hypothecation is so popular is that the public is longing to see what taxes are being spent on,' Bowles says.

Although he is nearing retirement, he is not particularly pushing for budget help for pensioners. Closer to his heart is the voluntary work he does for a mental health charity. He is shocked that there is no psychiatrist for the under-16s of central Cheshire. He wants better tax treatment for charities, including extra help over VAT.

'Fair deal for pensioners'

Joseph Rice, a pensioner from Bracknell, is well aware that pensioners have little opportunity to get out and earn more money. So he would like to see the chancellor do something to help pensioners look after their unearned income. He wants a higher personal allowance for the over-65s, 'tax banding for retired people', and 'a better return on National Savings' since, as 'your ability to earn is reduced, you are at the mercy of the chancellor'.

He is particularly unimpressed by the 'derisory' returns of National Savings - including the Pensioners Bond (now paying 4.15% over a year - 0.5% below other bonds and Isas).

'The chancellor needs to be making these products more competitive with the funds on offer,' Rice says.

'Elderly people should not be feeling they need to go to the markets for a better return, dealing with fund managers, letting them take their commission. They really should not be doing too much of that.'

He also wants to see the whole tax system (including the tax return) simplified. 'Why should I have to employ a tax adviser to fill in my tax return?'

He particularly wants the fiscal and political issues of budget-setting spelled out, rather than hidden.

'I do appreciate that he has to raise money, but I think it is important that he makes it clear to people that he is going to do it like that. So often, it is very difficult to understand what he is doing.'