Osborne to cut tax for poor, maintain spending on building
British Chancellor of the Exchequer George Osborne will reduce income tax for Britain’s poorest workers and maintain infrastructure spending to cushion the impact of the biggest deficit cuts in a generation, according to a person with knowledge of the plans.
Announcing his budget in Parliament in London today, Osborne will raise the level above which the lowest rate of income tax is levied by £1,000 to £7,475, exempting 880,000 low earners from payment, the person said.
In raising the tax ceiling, Osborne is adopting a policy of the Liberal Democrats, junior partner in a coalition with Osborne’s Conservatives.
The chancellor will also protect spending on school buildings, hospitals and similar projects from further budget cuts, in an effort to convince voters that ordinary Britons won’t suffer unduly as a result of the deficit- busting plan, the person said.
Documents prepared for publication today will show that the poor will pay least, the middle classes won’t bear most of the cost and only the very rich will pay significantly more, the person said.
Osborne is seeking to prevent the loss of Britain’s top grade investment rating with measures that the independent Institute for Fiscal Studies estimates will slice £85bn off the budget, equivalent to 5.7pc of gross domestic product, to eliminate the shortfall by 2015.
Osborne has already pledged to give new companies a one- year payroll-tax break to encourage economic growth outside Britain’s most prosperous regions, according to a person with knowledge of the plans.
The £900m program will exempt new companies with fewer than 10 workers from making National Insurance contributions.
The program will last three years and apply to workers earning less than £44,800 a year in all of the UK apart from London, eastern and southeast England, the person said.