Tag Archives: Tax

Chancellor Says Tax Hikes and Spending Cuts Ahead

Chancellor George Osborne has indicated that increased taxes and cuts to spending are likely to lie ahead for the UK. These measures, the Chancellor said, will be a necessary evil in order to deal with the economic “shock” of leaving the EU.

Speaking on radio to the BBC’s Today programme, Osborne reiterated warnings he had given prior to the referendum, and said that he continues to stand by the view that the UK’s future outside of the EU would not be “as economically rosy” as a future inside. The warnings he gave before the vote was taken, he claimed, “have started to be borne out by events.”

The UK’s economy has already felt the initial shock of the decision to leave the Union. After the referendum result was announced, with a narrow majority voting in favour of “Brexit,” financial markets were sent reeling with the stock market falling markedly and the value of the pound rapidly descending to its lowest levels since 1985.

Osborne said that the result of the economic impact of leaving the EU would leave the country poorer. He emphasised the government’s responsibility to “provide fiscal security” and the need for the country to “live within its means.”

After making these comments, Osborne was asked whether this would mean the need for increases in tax and cuts to government spending. His response to this question was “Yes, absolutely.”

A decision regarding the shape that these austerity measures might take, however, would have to be made by the new Prime Minister, Osborne said. With David Cameron announcing in the wake of the referendum that he would step down, the role of his successor as leader of the Conservative Party and therefore the current government is up for grabs. Making such a significant decision on matters of spending and tax, Osborne said, would not be possible while this leadership contest was still ongoing, but rather would fall to whoever emerged from that contest as the new leader of the country.

Osborne also said that it was a decision for those who had supported “Brexit.” Those who campaigned for the country to withdraw from the European Union, he said, are the ones responsible for drawing up a plan for the country following this withdrawal.

Despite reiterating warnings he had given before the referendum and predicting austerity as a result of Brexit, Osborne said that he stood by the Conservative Party’s decision to hold a referendum.

Prime Minister Pledges Tax Cuts Ahead of May Election

David Cameron has stated that the people of the UK “deserve tax cuts” and that there is an “economic, moral and practical case” for reducing the amount of tax they pay. The Prime Minister’s comments came as part of a speech given in Hampshire, in which he outlined his pledges on the subject of taxation ahead of the general election in May.

According to the Prime Minister, his party’s plans for taxation would see the personal allowance – the amount an individual can earn each year before they start paying tax – raised to £12,500 by 2020. This, he said, was fitting for a country that is “thoroughly in favour of work and effort.” The term of the coalition government has already seen the personal allowance raised from £6,475 when the current parliament was formed in 2010/2011 to 10,500 in the current financial year.

The Liberal Democrats have also pledged to ensure the personal allowance reaches the £12,500 by the time the next parliament ends in 2020. Though the pledges are identical, the parties disagree on where it originates within the current coalition government. Both parties seem keen to claim themselves as originators of the idea, with the Liberal Democrats also claiming to be the ones behind tax cuts during the current parliamentary term.

The Prime Minister insisted that the pledge to raise the personal allowance was “not just a vague promise” but that “we have a track record.” He went on to point out that, since his party came to power as the larger part of the coalition in 2010, tax cuts have delivered a £700 saving for 24 million people, and removed 3 million people from tax entirely. However, the Liberal Democrats seem to feel this is really their track record, claiming that they have “fought tooth and nail” to reduce tax as part of the coalition with the Conservatives.

Regarding the way a Conservative government would approach taxation if elected in May, the Prime Minister said: “We should start from the proposition that it is people’s money not government’s money and we should leave them with as much to spend as we can rather than frittering it away on wasteful government projects.”

He claimed that the Conservative party’s tax plans would remove a further million people from the need to pay any tax at all, with nobody working a 30 hour week at minimum wage required to give money to the government.

The government has also pledged to raise the threshold at which people are required to start paying tax at the 40% rate from £41,900 to £50,000 in a bid to help earners in middle income brackets. This would, he said, support “aspiration.”