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Brown cuts basic tax rate by 2p Brown cuts basic tax rate by 2p
(10 minutes later)
Chancellor Gordon Brown has cut 2p off the basic rate of Income Tax. Gordon Brown is cutting the basic rate of income tax by 2p to 20p from April 2008 in a surprise move at the end of what is likely to be his last Budget.
In a surprise move at the end of what is expected to be his final Budget he cut the rate from 22p to 20p, although he also scrapped the lower rate. But the chancellor also scrapped the 10p lower rate, which means most people are unlikely to be better off.
He also cut Corporation Tax from 30p to 28p, while this year's 2p fuel duty rise will be delayed for six months. He also cut corporation tax from 30p to 28p, while this year's 2p fuel duty rise will be delayed for six months.
Duty on beer and cider rises 1p a pint, wine 5p and cigarettes 11p. Road tax for the most polluting cars rises to £300 this year, and to £400 in 2008. Duty on beer and cider rises 1p a pint, wine 5p and cigarettes 11p. Road tax on "gas guzzlers" rises to £300 this year.
Mr Brown also cut VAT from 17.5% to 5% on nicotine patches and similar products and said duty on spirits was being frozen.Mr Brown also cut VAT from 17.5% to 5% on nicotine patches and similar products and said duty on spirits was being frozen.
READ THE REPORT Budget 2007 in full [1.76MB] Most computers will open this document automatically, but you may need Adobe Reader
Mr Brown told the Commons the British economy was growing, alongside the US, faster than all the other G7 economies - between 2.5% to 3% for 2008 and 2009.Mr Brown told the Commons the British economy was growing, alongside the US, faster than all the other G7 economies - between 2.5% to 3% for 2008 and 2009.
In this economic cycle, current spending and revenues show a surplus of £11bn, which the chancellor said met his Golden Rule.In this economic cycle, current spending and revenues show a surplus of £11bn, which the chancellor said met his Golden Rule.
Mr Brown said: "My report to the country is of rising employment and rising investment; continuing low inflation, and low interest and mortgage rates.Mr Brown said: "My report to the country is of rising employment and rising investment; continuing low inflation, and low interest and mortgage rates.
"This is a Budget to expand prosperity and fairness for Britain's families - and it is built on the foundation of the longest period of economic stability and sustained growth in our country's history.""This is a Budget to expand prosperity and fairness for Britain's families - and it is built on the foundation of the longest period of economic stability and sustained growth in our country's history."
He said more cash would be made available for public services from efficiency savings and the £36bn sale of government assets, ahead of the publication of the Comprehensive Spending Review, which will take place in the autumn rather than July as previously expected.He said more cash would be made available for public services from efficiency savings and the £36bn sale of government assets, ahead of the publication of the Comprehensive Spending Review, which will take place in the autumn rather than July as previously expected.
For the coming year, cash for investment and reform in the NHS in England will rise by £8bn, said Mr Brown.For the coming year, cash for investment and reform in the NHS in England will rise by £8bn, said Mr Brown.
In the whole of the UK, total additional NHS expenditure to rise by almost £10bn, he said.In the whole of the UK, total additional NHS expenditure to rise by almost £10bn, he said.
Intelligence and counter-terrorism will receive an additional £86m for the coming year.Intelligence and counter-terrorism will receive an additional £86m for the coming year.
He announced what he said was a 25% increase in science funding.He announced what he said was a 25% increase in science funding.
Budget changes will be broadly neutral for public finances.Budget changes will be broadly neutral for public finances.
Mr Brown is seeking to regain the initiative after a senior civil servant accused him of "Stalinist ruthlessness".Mr Brown is seeking to regain the initiative after a senior civil servant accused him of "Stalinist ruthlessness".
Mr Brown was reported to be "incandescent" with rage after the criticism from former head of the civil service, Lord Turnbull on Tuesday.Mr Brown was reported to be "incandescent" with rage after the criticism from former head of the civil service, Lord Turnbull on Tuesday.
BUDGET POSSIBILITIES Tax breaks for green homeownersStamp duty threshold raisedInheritance tax tightenedExtra money to tackle child povertyState pension increase (already announced)ISAs to continue beyond 2010 (already announced) The Budget: What we know Read our Budget blog
The Budget comes after a week which has also seen an increase in inflation and poor opinion polls for Labour.
There is speculation he will unveil a cut in business taxes and unveil extra help for pensioners to pay council tax bills.
But education is likely to be the main winner, with extra cash to help fulfil Mr Brown's ambition of closing the gap on spending per pupil between state and private schools.
According to The Guardian, Mr Brown will also unveil an extra £1bn in tax credits to alleviate child poverty.
There could also be tax breaks for homes which use solar panels and wind turbines and a doubling of road tax to £400 a year for the most polluting vehicles.
HAVE YOUR SAY Whatever happens, one thing will be the same: The UK is becoming far too expensive to live in. Ali, Machynlleth Send us your comments What has Brown achieved?HAVE YOUR SAY Whatever happens, one thing will be the same: The UK is becoming far too expensive to live in. Ali, Machynlleth Send us your comments What has Brown achieved?
The chancellor may also tighten the rules on inheritance tax and with property prices continuing to rise and act on the issue of stamp duty - currently charged on properties priced above £125,000.
It is expected to be the chancellor's final budget - if he takes over from Tony Blair, as expected, within the next few months.It is expected to be the chancellor's final budget - if he takes over from Tony Blair, as expected, within the next few months.
Mr Blair has said he will step down by September, and is expected to announce his resignation shortly after the Scottish and Welsh elections on 3 May.Mr Blair has said he will step down by September, and is expected to announce his resignation shortly after the Scottish and Welsh elections on 3 May.