Osborne unveils 30-bn-pound spending cuts, massive tax hike
Britain today announced extra spending cuts worth 30 billion pounds a year, hiked VAT from 17.5 per cent to 20 per cent, a two-year pay freeze for most public sector workers that will help wipe out the country's record 155-billion pound deficit within five years.world Updated: Jun 22, 2010 19:55 IST
Britain announced Tuesday extra spending cuts worth 30 billion pounds a year, hiked VAT from 17.5 per cent to 20 per cent, a two-year pay freeze for most public sector workers that will help wipe out the country's record 155-billion pound deficit within five years.
Unveiling the toughest budget in a generation in the House of Commons, chancellor George Osborne vowed to bring the country's books "back to balance" by 2015/16 through a combination of lower spending and higher taxes.
In a package already dubbed a 'bloodbath', he hiked VAT to 20 per cent, a move that will cost the average family 400 pounds a year in taxes. "The years of debt and spending have made this unavoidable," Osborne said.
Capital gains tax is also being raised from 18 per cent to 28 per cent for top-slab taxpayers and child benefit frozen for three years as part of the government's attempts to counter an 'explosion' in welfare handouts.
The chancellor admitted that the public sector would be hardest hit -- with 77 per cent of the package to tackle the deficit coming from slashing spending.
Acting Opposition leader Harrient Harmon described the budget as a "reckless Tory budget" that will throw people out of jobs and hold back economic growth. "Today's budget is bad for growth. Today's budget is bad for jobs. Tens of thousands of people will be out of work. It is counterproductive and jeopardise recovery," she said.