By Luke Whitmore, 22nd June 2010
Chancellor George Osborne is expected to declare painful cuts in
today's Emergency Budget, the first to be announced under the new
coalition government.
Spending will be slashed and taxes raised in an effort to begin
dealing with Britain's unprecedented deficit of £155 billion.
Public service funding is expected to drop by a fifth over four
years, with some union leaders suggesting that this could mean a
million employees in the public sector being made unemployed.
While the starting point for paying income tax will be raised by
£1,000 to £7,475, a move which will lead to almost 900,000 people
being better off in tax terms, this comes alongside a raft of other
measures which could mean significant belt-tightening for many in
the months to come.
These measures are predicted to include a 2.5% VAT rise from
£17.5% to 20% - a move which is estimated to cost the average
family £400 extra annually - and higher taxes on beer, wine and
spirits, as well as tobacco.
Airport departure levies are also set to increase, meaning taxes
of around £300 will be added to the cost of the typical family
holiday. There is talk of switching in future to a tax per plane,
rather than per passenger, but details of this are unclear at
present.
Council tax rates are also expected to be frozen for two years
as a means of easing the burden on taxpayers, but nonetheless we
have been warned that there are tough times ahead.
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