Tax rises set to pull in extra £50billion

GEORGE Osborne yesterday announced plans to raise almost £50billion more in tax to drag Britain back into the black. The Chancellor had appeared to deliver a giveaway Budget, following the confirmation of tax cuts worth £24.6billion for businesses, the low-paid and middle-class workers.

However, he also revealed a series of policies expected to raise an extra £ 47.2billion over the course of this Parliament – resulting in a net increase of £22.6billion for the taxman’s takings.

These measures include a sharp increase in the tax on insurance, as well as higher levies on dividends and motorists’ excise duties.

However, Mr Osborne admitted that he will take one year longer than previously thought to wipe out Britain’s annual budget deficit, which is now expected to become a surplus in 2019/20. The Chancellor said this slower pace of deficitreduction – equal to that seen in the last parliament – would create a ‘smoother path to the same destination’.

He stressed that the crisis in Greece vindicated his decision to press ahead with austerity, following an explosion of bor- rowing during the Labour years. ‘You only have to look at ... Greece to realise that if a country is not in control of its borrowing, the borrowing takes control of country,’ he said.

The Treasury added that the ‘prolonged’ stand-off between the Greeks and their creditors is the ‘biggest external risk to the UK economy’, as we remain ‘highly exposed to wider market instability’.

Gross domestic product was found to have risen by 3 per cent last year – the fastest rate since 2006, and the strongest in the G7. The Office for Budget Responsibility, the Treasury’s watchdog, forecast growth of 2.4 per cent this year and 2.3 per cent next year – putting Britain on course to lead the G7 once again.

Borrowing, which reached a record £ 153.5billion under Labour in 2009- 10, fell to £89.2billion (or 4.9 per cent of GDP) last year.

Yesterday’s OBR projections forecast this to fall further to £69.5billion this year – £6billion lower than first anticipated. However, the overall national debt has soared from around £500billion on the eve of the financial crisis to £1.5trillion today.

The OBR said Mr Osborne’s new deficit-reduction timetable would represent ‘less of a rollercoaster’ for public services facing cuts – but it will still be ‘a bumpy ride’.