Cameron and Clegg unveil plan to reduce UK deficit
Published 21/05/2010 | 05:00
SMALL investors, married couples, motorists and holidaymakers are likely to be hit with tax rises under plans unveiled yesterday by Britain's coalition government.
The tax increases, which will affect the middle classes, are designed to protect lower-paid workers and help pay Britain's debts.
David Cameron and Nick Clegg published the final coalition agreement, setting out the broad plans for the government over the next five years.
The document confirmed that it would push ahead with plans to increase sharply capital gains tax on the sale of second homes, shares and buy-to-let properties.
The plans, which could see the tax more than double from 18pc to 40 or even 50pc, will be set out in detail in next month's budget.
Conservative plans to offer more generous tax breaks for inheritance tax, first-time buyers and home owners have been watered down or abandoned.
And plans to cut fuel duty when oil prices are high have also been abandoned, leading to fears that motorists will be targeted.
More money is expected to be raised by changing the way flights are taxed, which could add more than £300 (€345) to the cost of a long-haul family holiday.
The extra revenues will be used to reduce income tax for basic-rate taxpayers who are earning less than £35,000 (€40,000).
The parties agreed to "significantly accelerate the reduction of the structural deficit over the course of a parliament", claiming that most of that would be "borne by reduced spending rather than increased taxes".
About 80pc of the money used to pay national debts will come from spending cuts -- with the rest from tax rises.
This is regarded as a major victory for the Conservatives in the coalition discussions.
But many experts believe that it will be difficult for ministers to cut spending sharply enough and that further tax rises may be necessary.
The document confirmed that there would be a referendum on changing the voting system for the next election.
Accountants and financial experts said the coalition agreement did not provide enough detail to form a judgment on the merit of the tax and spending plans. (© Daily Telegraph, London)