Income tax cut in Brown’s Budget
In his 11th Budget as Chancellor, the man most likely to succeed Tony Blair as Prime Minister later this year announced modest rises in taxes on beer and wine and no change in the duty on spirits.
Tax exemption for capital gains will rise to £18,400 for civil partners and married couples, Mr Brown announced.
The Chancellor revealed that the basic rate of income tax will fall back to 20% from April 2008, while the top-rate threshold will be raised to £43,000 from April 2009.
The 10p starter rate of income tax is to be scrapped.
Lesbian and gay pensioners who are in a civil partnership may benefit from rises in the tax-free married allowance.
Couples under 75 will have a tax-free allowance up to £19,540 and for a couple over 75 up to £20,000.
Mr Brown rejected calls for the reintroduction of the married couples allowance.
“On closer inspection I have discovered that such a proposal would penalise 3 million widows and their children who would be denied the allowance, and would also penalise wives or husbands left by their spouse,” he told MPs.
“I have discovered that a transferable tax allowance earmarked for families with children under 5 would be available to just 1 million married couples.
“I can tell the House that far from rewarding marriage would exclude the vast majority of married couples – 11 million married couples and 11 million children excluded and left out.”
Mr Brown also revealed a rise in the inheritance tax threshold to £350,00 by 2010.
The Chancellor cut tax on nicotine patches and other smoking cessation aids to just 5% from July, while duty on cigarettes is to go up 11p per packet.
Beer will rise by 1p a pint from midnight Sunday, cider by 1p a litre, wine by 5p a bottle and sparkling wine by 7p. Duty on spirits will be frozen.
Environmental concerns are reflected in a rise to £300 in road tax for “gas guzzling” vehicles, while the most eco-friendly vehicles will find their road tax cut to just £35. Fuel duty will rise by 2p per litre from October 2007.
Corporation tax will be cut from 30% to 28%.
The Conservative leader David Cameron was unimpressed with the Chancellor’s Budget.
“His great experiment on tax and spending has failed,” he told MPs.
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“He is an out-of-date politician… And the question that everyone is asking is ‘Where has the money gone?'”
The Tories said the savings ratio fell in 2006 to 5%, less than half it was in 1997 and one million more people are not in education, work or training than when Labour came to power.
Liberal Democrat leader Sir Menzies Campbell said that the poor were being asked to pay for the rich and accused the Chancellor of missed opportunities.
Total public spending is expected to be around £587 billion for the coming year, around £9,650 for every man, woman and child in the UK.
It is set to rise to £615 billion in 2008-09, £644 billion in 2009-10 and £674 billion in 2010-11.
To see a breakdown of how that money is spent click here