More than £10 bn of taxes to be proposed in UK budget
More than 10 billion pounds of new taxes are to be unveiled by the UK in emergency budget on Tuesday as part of an estimated 85 billion pounds package of savings and tax rises to reduce Britain's record peacetime deficit, media reported today.world Updated: Jun 20, 2010 15:03 IST
More than 10 billion pounds of new taxes are to be unveiled by the UK in emergency budget on Tuesday as part of an estimated 85 billion pounds package of savings and tax rises to reduce Britain's record peacetime deficit, media reported on Sunday.
According to the 'Sunday Times', new Chancellor of Exchequer George Osborne will announce increase in VAT and capital gains tax on top of the Labour increases in National Insurance already in the pipeline.
Alcohol and tobacco duty will also increase, along with the tax on air travel, as the chancellor seeks to close the 155 billion pounds hole in the public finances.
The Tory chancellor will outline 40 billion pounds of spending cuts, with an immediate freeze on the pay of state employees and the slashing of middleclass benefits payments.
Tuesday's emergency budget is set to be the most draconian since 1981 when Geoffrey Howe increased income tax during the depths of the recession, the report said.
According to the 'Observer', the chancellor believes that by slashing the 180 billion pounds a year welfare bill, he can help protect spending in other areas, such as education, defence and transport, as well as safeguarding capital projects vital to the economy.
"If we drive down the welfare bill, that allows more money to be allocated to departments," a government source told the newspaper.
The focus on welfare and benefit reform is likely to include cuts in tax credits for wealthier families, and could see the end of child benefit payment to higher earners.
The painful measures to be announced on Tuesday will include: An increase in VAT from the current 17.5 per cent to a new level, possibly as high as 20 per cent, a rise in capital gains tax from the current 18 per cent to close 40 per cent with few exemptions, the report said.