Britain’s coalition government presented its austerity Budget in Parliament on Tuesday afternoon by increasing value-added tax and slashing welfare and benefits to cut public spending by £17 billion.
Chancellor George Osborne, who promised “tough but fair” action to wipe out the structural deficit within five years, increased VAT to 20 per cent, imposed a levy on banks, slashed child benefit, tax credits and housing benefits by £11 billion a year, froze public sector salaries for two years, froze funding for the royal family, and increased capital gains tax for high earners to 28 per cent.
“This is the unavoidable Budget. It is tough but it is fair. I am not going to hide hard choices from the British people. Today, we take decisive action to deal with the debts we have inherited,” Mr Osborne, who was flanked by Prime Minister David Cameron and deputy Prime Minister Nick Clegg, told the House of Commons.
Value-added tax has been to 20 per cent from current 17.5 per cent. The increase will come into effect from January 2011. “The years of debt and spending make this unavoidable,” Mr Osborne said, adding that this will raise £13 billion of extra revenues every year. However, he was greeted by loud jeers from the Opposition as he announced the increase. However, the Tory-LibDem coalition did not increase duties on fuel, tobacco or alcohol in the emergency Budget.
Mr Osborne blamed the last Labour government for his harsh budget of tax increases and spending cuts. “The coalition government has inherited from its predecessor the largest budget deficit of any economy in Europe, with the single exception of Ireland. One pound in every four we spend is being borrowed. What we have not inherited from our predecessor is a credible plan to reduce their record deficit,” the chancellor said.
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Same old Tory story: Labour
Age Correspondent
London
June 22: The Opposition Labour party and the trade unions on Tuesday criticised the Tory-LibDem coalition government for imposing drastic cuts in welfare spending and increasing value-added tax to 20 per cent.
“This is a Tory Budget that will throw people out of work, that will hold back economic growth ... and will harm vital public services. Yes, it’s his first Budget, but it’s the same old Tories, hitting hardest those who can least afford it and breaking their promises,” acting Labour leader Harriet Harman said in the House of Commons after chancellor Peter Osborne had unveiled his first Budget.