Factbox - Possible tax measures in budget

LONDON (Reuters) - Tax rises and public spending cuts look set to dominate the budget as the Conservative-led coalition stakes its reputation on bringing public finances under control.

Chancellor George Osborne has committed to eliminating the bulk of the structural deficit over the next five years, starting with 6 billion pounds of savings this fiscal year.

The Conservatives have pledged to cut the deficit in a "fair" way and need to keep the Liberal Democrats on board.

Following are some of the main areas where the government may seek to raise taxation. Revenue estimates are taken from the Treasury's "ready reckoner" for 2010/11 unless otherwise stated.

VAT

* Current rate: 17.5 percent

* Value of each percentage point rise: around 4.1 billion pounds

VAT is lower than most other European countries and is widely expected to rise, possibly to as high as 20 percent.

VAT is the government's third-largest source of revenue after income tax and national insurance contributions. A rise would be simple to put in place and generate revenue quickly. On the downside, it could hurt consumer spending and push up inflation expectations -- something that might worry the Bank of England.

Osborne might want to announce a delay in any VAT hike, thereby encouraging shoppers to bring forward purchases, giving the economy a near-term boost.

Items such as children's clothes and food are likely to remain exempt from the tax to avoid accusations that poor families are being hit harder.

CAPITAL GAINS TAX

* Current rate 18 percent

* A rise to match income tax rates could generate 0.5-1.0 billion pounds, according to Deloitte.

A rise in CGT was a key plank of the Liberal Democrats pre-election manifesto, and was adopted in the coalition agreement.

The government has said it wants to bring the tax -- levied on the sale of assets such as second homes and stock holdings -- "similar or close to" income tax, which ranges from 20 to 50 percent, depending on earnings.

Critics argue any rise would not generate much revenue as people would find ways to avoid paying it. A more effective way of raising revenue, they say, would be to cut the threshold at which people start paying the tax.

Plans to raise CGT have already prompted a backlash from many within the Conservative party who claim such a move would damage the recovery and make the country less competitive.

INCOME TAX

* Rates of 20, 40 and 50 percent depending on earnings

* Personal tax free allowance currently 6,475 pounds for those under 65.

The government has indicated a preference to tax consumption rather than labour and is unlikely to make radical changes to the headline income tax rates.

The government's long-term goal is to raise the tax-free allowance from 6,475 pounds to 10,000 pounds, although it has not given a timeframe for doing this.

Each 100 pound rise in the allowance would generate 510 million pounds for the public purse.

CORPORATION TAX

* Main rate 28 percent

* A one percentage point cut in the main rate would cost around 400 million pounds.

The Conservative election manifesto contained a pledge to lower the main rate to 25 percent, funded by scrapping various allowances. However, the LibDem business secretary Vince Cable warned the manufacturing sector would struggle if reliefs were scrapped, and an unfunded tax cuts would be hard to justify in the current climate.

Osborne has said his ambition is for Britain to have the lowest rate of corporation tax in the G20 and may signal future reductions to keep the business lobby sweet.

BANK LEVY

Osborne has said he wants to impose a levy on banks to help taxpayers recoup the cost of support given during the credit crisis.

He is expected to outline legislation for a tax on liabilities, rather than on profit. This would be similar to measures proposed in the United States and mean banks engaging in riskier activities are hit hardest.

While the Conservatives initially talked of raising 1 billion pounds from a bank levy, the Liberal Democrats have called for a tougher action and analysts reckon the hit could be up to 5 billion pounds.

SIN TAXES

Taxes on alcohol and tobacco rose in the previous government's Budget in March, but could rise again.

Value of a one percent rise in beer and cider duties - 30 million pounds; wine duties - 20 million pounds; tobacco duties - 35 million pounds.

SPENDING ENVELOPE

Osborne will publish a target for total spending over the next four years but will not give a departmental breakdown until later this year.

The government has said the brunt of deficit reduction will be borne by spending cuts rather than tax increases, citing a 80:20 ratio as a "good rule of thumb."

Based on forecasts from the Office for Budget Responsibility, the Institute for Fiscal Studies reckons the Budget will contain 34 billion pounds of fiscal tightening, in additional to the 51 billion pounds already envisaged by former Chancellor Alistair Darling.

If Osborne sticks to his 80:20 rule, this would mean 68 billion pounds of spending cuts against 17 billion pounds of tax hikes by 2015.

(Reporting by Christina Fincher)