Aftermath: Osborne’s Budget torn apart by critics
George Osborne faces widespread criticism this morning, as his Budget was attacked for taking money from pensioners while cutting taxes for high earners.
The chancellor's decision to phase out the 'age-related allowance', which allows pensioners to start paying tax at a higher income level than workers, was criticised across the political spectrum.
"No one watching this programme is a pensioner who is going to lose any cash as a result", he told ITV's Daybreak.
"They're not going to lose cash, we're going to increase the benefit. At the same time they'll be better off because the basic state pension is going up in a couple of weeks time by over £5 a week.
"No one loses any cash from this Budget."
Critics accused Mr Osborne of playing semantics with his defence of the policy. While no pensioner will have any cash taken away from them, they will not receive the tax break they had been expecting, losing them up to £285 a year.
The move was instantly branded a 'granny tax' online. It will hit up to five million older people over the next four years, who will pay an extra £3.3 billion in income tax.
Campaigners were also irritated by Mr Osborne's description of the freeze as a tax "simplification" during yesterday's Budget.
Political analysts were baffled by the chancellor's decision to penalise pensioners – the group most likely to vote in society – especially when he was taking the politically perilous decision to remove the top rate of rate of income tax for those earning over £150,000.
"I'm sort of baffled as to why the chancellor should think it's a good idea to single out pensioners," shadow chancellor Ed Balls said this morning.
"I think the chancellor is being pretty fast and loose, the way he's presenting this.
"It's important to look at the facts. He's put up taxes on fuel, on alcohol, on cigarettes, he's hit pensioners, but he's given to 300,000 people on incomes above £150,000 a £3 billion tax cut."
There was some good news for the government, however.
Pharmaceutical firm GlaxoSmithKline announced this morning it would open a factory in the UK as a result of coalition changes to patent regulations and cuts to corporation tax.
The move is considered significant because it marks a change in the decades-old trend of manufacturing jobs being taken overseas.
"I'm not unhappy about this being described as a rational decision in response to the change in the tax regime and I think this is exactly what it is, and of course it's both the patent box and the fall in the corporation tax rate," chief executive Sir Andrew Witty told the Today programme this morning.
Finally, Fitch's ratings agency said the Budget left Britain's AAA credit rating unaffected.
"However, the scale of the fiscal challenge remains large relative to its AAA peers and the chancellor confirmed that austerity will have to extend beyond the term of the current parliament if the government's fiscal targets are to be met," the agency warned.
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