By Vishal Chopra

IN my 20 years as an adviser I’ve never known tax to feature so prominently in the public consciousness. The fundamental principles of our tax system are being hotly debated, and most people have a view on this as our tax system increasingly interacts with those of other countries.

Earlier this month most of the world's nations signed up to a historic BEPS 2.0 deal to ensure large businesses pay a minimum rate of corporation tax with a fairer system of taxing profits where they are earned. This is a landmark initiative which would have been unthinkable without sustained public pressure in recent years.

The Chancellor presents his Autumn Statement tomorrow and will be keenly aware of the intense scrutiny it will face. How does Rishi Sunak pay for the costs of the pandemic without upsetting a recovering economy? How does he manage this in a way that is acceptable to the taxpayer?

The backdrop here is a UK economy which has recovered faster in the first half of the year than the Office for Budget Responsibility (OBR) previously predicted, with borrowing levels approximately £20 billion lower than expected, and with large parts of the population ending furlough and being absorbed back into employment.

The corporation tax rate is already set to rise to 25% in 2023 and the new Health and Social Care Levy will apply from next year. Although there is broad agreement that taxes need to be raised to fund the cost of the pandemic, neither businesses nor individuals would welcome further tax increases at this stage.

We can expect to see a fiscally neutral budget, with modest adjustments to existing tax regimes. The Office of Tax Simplification (OTS) has previously suggested more closely aligning the rates of capital gains and income taxes, and reform of pensions tax relief is an area that always appears to be up for consideration.

Targeted support to help certain sectors return to growth is likely and we may see further VAT support for the hospitality and leisure sector which has been hit particularly hard. With COP26 just around the corner, look out also for announcements on environmentally focused policies. We have also recently heard that the Chancellor may be forming plans to introduce an online sales tax to level the playing field between online and high street retailers.

There has been spirited public debate over the use of wealth taxes and land value taxes to repair public finances, and the distortion between how the employed and self-employed are taxed continues to attract attention. The Chancellor is unlikely to make any material changes in these areas for now.

The Chancellor has, however, proven himself to be adept at thinking outside the box and his intention to set out new rules to strengthen the UK’s fiscal prudence may be the more interesting part of what is otherwise shaping up to be a relatively quiet Autumn Statement.

Vishal Chopra is Head of Tax in Scotland at KPMG UK