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UK Chancellor Envisions Permanent Tax Cuts

By Amanda Banks,, London

07 January 2014

UK Chancellor George Osborne has outlined his vision of "permanently cutting people's taxes by permanently cutting the spending those taxes pay for," in a keynote New Year speech on the economy.

He said that while tax changes can never be ruled out, the Government's whole economic plan of reducing Britain's debt and creating economic stability could be delivered by making further spending cuts of GBP60bn over the next four years, rather than by increasing taxes. In particular, he promised welfare cuts of GBP12bn in the first two years of the next Parliament following elections in May 2015, and that the welfare system and Government itself would be made "permanently smaller."

According to the Chancellor, tax cuts introduced by the Government amounted to GBP50bn, which had been paid for without any extra borrowing.

Osborne explained that supporting workers by cutting income taxes and freezing fuel duty was a key part of the Government's economic plan. He said that increasing the tax-free income allowance to GBP10,000 from this April will mean an extra GBP60 per month for the "typical worker," while filling a car will cost GBP11 less than would otherwise have been the case.

The Chancellor also said that the Government was "backing business" by helping with high business rates, and by introducing an employment allowance for small businesses which will mean less National Insurance (NI) will be payable. He added that the NI payment (which Osborne referred to as a "jobs tax") would be abolished altogether for employers who employ workers under the age of 21.

Osborne further took aim at opposition calls to raise corporation tax, stating that such a move would send a "disastrous signal" to the rest of the world.

Other aspects of the Government's plan mentioned by Osborne include capping immigration and delivering the best schools and training. The Government also plans to introduce a charter for budget responsibility which will commit Britain to reducing debt, including using surpluses in good years.

Summing up, the Chancellor said that the country was being rescued "from the brink of economic collapse," and that he wanted Britain to be a country "that is in control of its own destiny in this world."

Osborne delivered the speech at the Birmingham factory of automotive component manufacturer Sertec, which Obsorne praised for creating 200 new jobs with plans for 400 more in the next four years.

TAGS: tax | economics | corporation tax | United Kingdom | tax thresholds | tax rates | tax breaks | individual income tax

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