It's in the bag

But we'll have to wait until Gordon Brown opens it

The election is over, we have a New Labour Government with a big majority, the Queen has read her speech (OK, she has a good ghost writer for it). Will New Labour be too busy to alter taxes?

No chance. The speech flagged one definite measure - the much-heralded windfall tax on privatised utilities. Plenty of detail needed on that one, but what else is Mr Brown going to pull out of his battered Budget bag? (Assuming he uses it - who knows, he might ditch it along with the white tie and tails.)

One measure we should be able to bank on is the reduction in VAT on domestic fuel - so gas and electricity bills will go down when the VAT rate goes down from 8 per cent to 5 per cent. Incidentally, there is no point in not paying today's bill and risking disconnection in an effort to get into a lower VAT rate, If the bill has arrived, it will carry VAT at the rate when the bill was raised, not when you get round to paying it.

But then Mr Brown may turn his attention to tax raising measures. Indeed, it seems the Bank of England and various City commentators are hinting that he needs to raise taxes to help control the economy. What might come?

There are measures that would come in immediately and those more likely to come in from the start of the next tax year. Some or all will no doubt be described as blocking loopholes.

Obvious overnight changes are to things like petrol - where Labour is committed to increasing duties - and tobacco, where we have already had a signal of an attack in the speech. In the anti-avoidance arena we could see changes to inheritance tax, possibly with the ending of the exemption for gifts during life ("PETs"). Some of the capital gains tax reliefs such as reinvestment relief may be restricted, making it less easy to shelter any gains made.

Next April might well see an end to mortgage tax relief or a reduction in its value at least. Some restriction of the tax advantages of pension contributions is also much discussed - though as in principle UK plc needs us to save for our retirement rather than look to the State, that needs care.

There is an indirect way to squeeze revenue from the pensions area that has many companies worried - altering the tax credit on dividends.

Currently companies pay advance corporation tax (ACT) on dividends at one quarter of the cash dividend. Thus, an pounds 80 dividend requires ACT of pounds 20. The company recovers the ACT by reducing its main corporation tax bill - it's just paid it earlier - and the recipient of the dividend gets a credit to set against any tax bill. That means no tax to pay for basic or lower rate taxpayers, but pounds 20 more for those on higher rate.

The key point is that pension funds can get the pounds 20 repaid. Needless to say, they are fond of dividends as they get pounds 100 out of that pounds 80 dividend. So cutting the ACT rate in half actually raises money - less to pay back to the pension funds and more extracted from higher rate taxpayers. Those on basic rate probably wouldn't be pursued for the missing 13 per cent, but who knows?

A number of companies are thinking about advancing dividend payments to ensure the 20 per cent rate and credit applies. But changing ACT - or going further and phasing it out altogether - is really something one would like to think requires thought and time, and thus perhaps is one for next April rather than next month.

Similarly, a general reform of CGT, perhaps introducing lower rates for long-held investments, may be in the wings.

Sadly I do not have a crystal ball to guarantee that my musings accurately reflect what will come out in the Budget. But I suspect that all the above are somewhere on Mr Brown's scratchpad of ideas.

John Whiting is a tax partner at Price Waterhouse