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Brown denies Budget 'con trick' Brown denies Budget 'con trick'
(about 2 hours later)
Chancellor Gordon Brown has rejected Conservatives' claims his Budget tax changes amounted to a "con trick".Chancellor Gordon Brown has rejected Conservatives' claims his Budget tax changes amounted to a "con trick".
Mr Brown cut 2p off the basic tax rate, but he also axed the 10p starter rate, and changed the National Insurance limits, leaving few people better off.Mr Brown cut 2p off the basic tax rate, but he also axed the 10p starter rate, and changed the National Insurance limits, leaving few people better off.
The Tories said lower earners would pay more income tax, while the Lib Dems say "the poor are subsidising the rich".The Tories said lower earners would pay more income tax, while the Lib Dems say "the poor are subsidising the rich".
But Mr Brown said the reforms had simplified the system and were "in the best interests of the country".But Mr Brown said the reforms had simplified the system and were "in the best interests of the country".
BUDGET HIGHLIGHTS 2p off basic rate of income tax10p starter rate abolished 2p cut in corporation taxGas guzzling car duty up to £300 this year and £400 next Beer and cider up 1p, wine 5p, spirits duty frozen11p on cigarettes2p petrol increase frozen for six monthsMore cash for schools and hospitals Budget at-a-glance BBC experts' blogBUDGET HIGHLIGHTS 2p off basic rate of income tax10p starter rate abolished 2p cut in corporation taxGas guzzling car duty up to £300 this year and £400 next Beer and cider up 1p, wine 5p, spirits duty frozen11p on cigarettes2p petrol increase frozen for six monthsMore cash for schools and hospitals Budget at-a-glance BBC experts' blog
He told BBC Breakfast the average family would be £5 a week better off as a result of the income tax changes.He told BBC Breakfast the average family would be £5 a week better off as a result of the income tax changes.
On Wednesday Mr Brown announced the income tax rate would be cut to 20p from April 2008. He denied lower paid workers would be worse off: "For people who are lower earners the tax credit wipes out the income tax liability and that's why lower income workers are better off now as a result of what we have done as a government."
In his 11th Budget Mr Brown said his stewardship of the economy meant he could lower the basic rate to its lowest level for 75 years. Asked about allegations by ex-colleague Lord Turnbull that he has "Stalinist" tendencies, Mr Brown said some civil servants had been upset by "difficult decisions" he had made, such as keeping Britain out of the euro.
The surprise announcement, at the end of his speech, sought to "rewrite the history of the Brown decade at the Treasury", said BBC political editor Nick Robinson, adding the chancellor had not previously been noted as a "tax cutter". 'Difficult decisions'
"If you take difficult decisions and you are prepared to see them through, you are not going to please everybody all the time," he told BBC Radio 4's Today.
But he said he did not "hold grudges against people" and simply wanted to "get on with the job".
There are winners but there are also millions of losers Shadow chancellor George Osborne Send us your comments
On Wednesday, in his eleventh Budget, Mr Brown announced the basic income tax rate would be cut to 20p, its lowest rate for 75 years, from April 2008.
The Budget is expected to be Mr Brown's last as chancellor, as he is the favourite to succeed Tony Blair as prime minister within the next few months.The Budget is expected to be Mr Brown's last as chancellor, as he is the favourite to succeed Tony Blair as prime minister within the next few months.
WINNERS AND LOSERS Anyone earning between about £17,000 and £40,000 a year will be better offThose earning less than about £17,000 will lose from the abolition of the 10p tax rate but they should more than claw it back from working tax creditThose on £43,000 will pay £20 a year more in tax All figures for 2008. Source: PriceWaterhouseCoopers
It was seen by some as a set-piece statement, setting the stage for his anticipated takeover at Downing Street.It was seen by some as a set-piece statement, setting the stage for his anticipated takeover at Downing Street.
Shadow Chancellor George Osborne described the Budget as a "con trick", hitting low earners. 'Not fairer'
"Their income tax bill went up yesterday and I don't think listening to that Budget they would have thought that," he told the BBC Radio 4's Today programme. But Shadow Chancellor George Osborne described it as a "con trick", hitting low earners.
No-one "would have worked out the whole thing is a con-trick", he added. "Their income tax bill went up yesterday and I don't think listening to that Budget they would have thought that," he told BBC Radio 4's Today programme.
Lib Dem leader Sir Menzies said the chancellor had missed an opportunity to build a fairer, greener and more prudent Britain. WINNERS AND LOSERS Anyone earning between about £17,000 and £40,000 a year will be better offThose earning less than about £17,000 will lose from the abolition of the 10p tax rate but they should more than claw it back from working tax creditThose on £43,000 will pay £20 a year more in tax All figures for 2008. Source: PriceWaterhouseCoopers
"He has spurned all of these opportunities. He has concentrated, not surprisingly, on his own political succession," he said. He challenged Mr Brown to admit his Budget will leave 3.5 million families worse off.
"The 2p cut in the basic rate is welcome, but let us be clear, this is an income tax for the wealthy dressed up as a tax cut for the poor." "There are winners but there are also millions of losers. There are 3.5 million families that are worse off," he said.
Lib Dem Treasury spokesman Vince Cable said: "An awful lot of people are not going to come out of this much better, it's not necessarily any fairer."
He said low paid workers would be hit "quite badly", particularly if they were single, and tax credits were not the answer as they were a "means-tested benefit" which was "complicated" and often did not work.
'Oppressing''Oppressing'
BBC economics correspondent Hugh Pym said that the changes meant someone on £14,000 a year would pay an extra £90 in tax and National Insurance - but that would be offset by claiming working tax credit. BBC economics correspondent Hugh Pym said the changes meant someone on £14,000 a year would pay an extra £90 in tax and National Insurance - but that would be offset by claiming working tax credit.
BUDGET CALCULATOR Work out how the 2007 budget will affect you
Someone on £25,000 a year would pay £128 less, while someone on the higher tax rate of £43,000 would pay an extra £20.Someone on £25,000 a year would pay £128 less, while someone on the higher tax rate of £43,000 would pay an extra £20.
SNP leader Alex Salmond said: "I think the disappointing thing is, if he was going for a huge reduction in tax, then he should have gone for council tax which is the one that's so unfair and oppressing so many people across the country."SNP leader Alex Salmond said: "I think the disappointing thing is, if he was going for a huge reduction in tax, then he should have gone for council tax which is the one that's so unfair and oppressing so many people across the country."
Other measures announced include more money for education and the NHS in England, intelligence, counter-terrorism and defence, as well as for people who lost their pensions when their employers went bust before 2005. Plaid Cymru MP Adam Price said the chancellor had done nothing to help poor families in Wales.
BUDGET CALCULATOR Work out how the 2007 budget will affect you
Road tax was reduced for the least polluting cars and increased on "gas guzzling" vehicles.
Corporation tax for businesses was also revamped - the headline rate from April 2008 was cut from 30% to 28%, but there was dismay among smaller firms that the rate they pay would rise from 19% to 22% in 2009.
The level at which inheritance tax kicks in will increase in stages from £285,000 to £350,000 in 2010.
And the starting threshold for the top rate of income tax will rise to £43,000 from 2009 - but the ceiling on national insurance was also raised.
Robert Chote, director of the Institute for Fiscal Studies, said the Budget had confirmed that "the next few years will see the tightest squeeze on public spending for a decade".
But he said, having established his mark on the machinery of monetary policy and planning public finances, Mr Brown was now staking his claim to being a tax reformer, by simplifying income tax and national insurance.