There will be no further tax rises or spending cuts announced in Wednesday’s Budget, according to Chancellor George Osborne.
Speaking on the BBC Andrew Marr programme yesterday, he added that he would not divert from his current plans to cut the deficit.
He said: “I can say in the Budget this week I am not going to be asking for more tax increases or more spending cuts.
“We have asked what is required of the British people in last year’s Budget and that enables us to in this year’s Budget to move on to putting in place the policies that will help Britain compete, create jobs and help growth in the future”
The Office of Budget of Responsibility is expected to downgrade Britain’s growth prospects for 2011 from 2.1 per cent to around 1.8 per cent and Labour have criticised the Government for not doing enough to promote growth.
The income tax threshold will be raised by £1000 to £7,475 in April, which will remove 500,000 people from income tax altogether. Osborne may signal a further increase to this threshold on Wednesday as part of a longer term goal of increasing it to £10,000.
Osborne may also announce plans to consult on the Office of Tax Simplification’s recommendation to merge National Insurance and income tax.The move was called for in a recent OTS report which suggested it should be a “long-term” objective.
The Ernst & Young Item Club has estimated Osborne may have around £8bn of extra Government funds at his disposal due to higher than expected tax receipts. In a report today, it suggests Government borrowing will hit £140.2bn this year, £8.3bn less than the £148.5bn previously estimated by the Government.
Osborne refused to confirm any plans to scrap a planned increase in fuel duty but it has been reported he will scrap the expected rise in air passenger duty which would have seen flights taxed at a higher level than they are now.
At a recent event, Osborne hinted that the Treasury may look to make changes to the VCT regime in the Budget. Experts predict the Chancellor may clamp-down on limited-life VCTs.