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Chancellor’s £30bn Budget of spending cuts and tax rises
Tuesday 22nd June 2010, 8:13AM BST.
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George Osborne is today set to unveil a £30 billion package of spending cuts and tax rises aimed at slashing Britain’s budget defecit.
The Chancellor is expected to strip millions of middle-income families of child-related benefits as well as targeting the pay packets of public sector workers in an Emergency Budget billed as the most significant and hardest hitting for a generation.
Treasury officials were preparing the ground for a budget which will cause pain across the economy as the planned spending cuts and tax rises bite into Britain’s fragile recovery.
Among the measures likely to be introduced by Mr Osborne are:
- A rise in the rate of VAT from its current level of 17.5 per cent. Putting it up to 20 per cent would bring in more than £10 billion a year on its own – however, it could be put up by less than 2.5 percentage points, or the increase could be deferred for fear of harming highstreet sales.
- Cutting the number of families eligible for child tax credit, currently paid to families with incomes of up to £58,000, or £66,000 if the child is under the age of one.
- Cutting the threshold to an income of £30,000 would see more than two million families losing out.
- Six million public sector workers face sweeping cuts to their pay and pension arrangements after David Cameron warned: “If you restrain pay you protect jobs.”
- A tax on banks to raise at least £1 billion – possibly levied on their balance sheets rather than profits or bonuses.
- A rise in Capital Gains Tax from its current flat level of 18 per cent, putting it closer to 40 per cent. However, following a campaign against the increase, there are likely to be significant concessions aimed at those approaching retirement age and entrepreneurs.
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