Brown launches ‘Budget for families, for fairness and the future’
The chancellor Gordon Brown concluded his 11th and most likely final budget to cheers as he announced a two pence cut in income tax to 20 per cent.
Budget 2007 is good for families, good for business and good for the environment, Mr Brown claimed.
However, the chancellor was accused of giving with one hand and taking away with the other as he announced the abolishment of the bottom ten per cent tax rate.
The Treasury maintains improved tax credits will target benefits at the poorest families and pensioners and the chancellor pledged to invest a further £1 billion a year in the working tax credit. Targeting tax credits is more effective than raising personal tax allowances, Mr Brown told MPs.
Child tax credits will mean by 2009, families with two children will in effect not pay tax until their household income reaches £24,000.
Education spending per pupil is to increase to £6,600. Each constituency will host an average of six child centres while free childcare will be extended, Mr Brown confirmed.
Pensioners are also set to benefit from Budget 2007. An additional £6 billion will be made available to compensate savers hit by collapsed occupational pension schemes. Furthermore the income tax allowance for pensions is set to increase, rising to £9,770 by 2011.
As was widely expected, the chancellor increased vehicle excise duty for the most polluting vehicles, with drivers of 4x4s set to pay £400 a year. As an incentive, the least polluting vehicles will remain exempt from duty. Mr Brown also confirmed he is lobbying Brussels to cut VAT to five per cent on the most environmentally friendly consumer goods.
Households will be encouraged to produce their own green energy. The Treasury is negotiation with banks to offer mortgages for environmentally friendly home improvements, while families who produce their own power and sell the surplus to the grid will be exempt from income tax.
Businesses will also gain from a cut in corporation tax, to fall by two per cent to 28 per cent, heralded by Mr Brown as the lowest of all major economies.
Following the recent Northern Ireland assembly elections, Mr Brown announced a £1 billion package for a devolved Northern Ireland. Intelligence and counter terrorism will also gain an additional £86 million.
The Treasury will fund additional spending on the back of a strong economy, as well as the £6 billion sale of student loans, efficiency gains and reduced debt.
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