Chancellor Alistair Darling will make his pre-budget statement today and announce a raft of measures which he believes will inject some life back into Britain’s slowing economy.
The pre-budget report, which is the Treasury’s opportunity to explain its policy for the forthcoming budget, is this year expected to feature a raft of taxation reforms, the most headline-grabbing being a reduction of 2.5% in the rate of VAT.
In the wake of mounting public debt, Gordon Brown has openly pledged to “spend his way†out of the current economic situation and is expected to borrow heavily in the coming year to fund a series of tax cuts.
Widely expected is a drop in the standard rate of VAT to 15%, which the government is hoping will be enough to encourage further consumer spending.
Other changes will include the postponement of controversial car tax changes for 12 months, postponement of changes to corporation tax and the extension of the rebate offered to low-earners following the scrapping of the 10p tax band.
Much of the burden for those tax cuts is expected to be passed on to high earners, with a proposed tax rate of 45p for those earning more than £150,000.
However, any increase in income tax rates would not come in unless Labour won the next election, allowing the party to claim that they had stuck to their2005 election pledge of resisting increases in income tax.
Another measure set to be included is a three-month "grace" period in which banks will be unable to repossess the homes of borrowers who are having problems with repayments.
The Chancellor will make his pre-budget speech today at 3:30pm.
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