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Emergency Budget 2010: VAT to hit 20% as chancellor makes tough choices
General News |
22/06/2010
George Osborne has delivered his first Budget as chancellor of the exchequer, announcing a range of measures designed to reduce the UK's national deficit.
Among the headline announcements are a controversial rise in VAT to 20 per cent from January 4th 2011 and a new rate of Capital Gains Tax at 28 per cent.
Described as a "reckless Budget" by acting Labour leader Harriet Harman, the chancellor's statement also introduced a two-year freeze on public sector pay for those earning more than £21,000, benefit cuts of £6 billion per year and a bank levy designed to raise £2 billion per year.
"The years of debt and spending have made this unavoidable," Mr Osborne said, claiming that the Budget will both "pay for the past and the future".
However, the government has stood by its pledge to support private sector growth, announcing a phased reduction in corporation tax from 28 per cent to 24 per cent over the next four years.
Entrepreneurs are also to be spared from the new higher rate of Capital Gains Tax, while the small business tax rate is to be lowered to 20 per cent.
Mr Osborne said businesses registering in the UK would be taxed at a lower rate than in any developed economy in Western Europe, and at the lowest rate in British history.
Other changes to be brought about by the emergency Budget include a freeze in child benefits, an increase of £1,000 in the personal allowance and the re-linking of pensions to earnings in April 2011.
Responding for the opposition, Ms Harman claimed the Budget had "no legitimacy", saying the VAT rise would unfairly penalise low-income households.
Her sternest words were reserved for the Liberal Democrat Party, who she accused of helping facilitate Tory cuts and reneging on promises made in its own election manifesto.
Posted by Jon Aspinell
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