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EDITIONS
 Wednesday, 17 April, 2002, 18:59 GMT 19:59 UK
Evan Davis: Budget view

In the event, the Budget was every bit as significant as billed, and perhaps surprisingly close to the versions trailed in the press.

It will go down with some of the other big tax-raising budgets in history. By the end of the Parliament we'll be paying over 8bn more in tax.

That equates to an average of over 6 a week for every household in the country.

Spending on the NHS will be several billion more than previously assumed, rising to 105bn by 2007-8.

Clever taxes

The taxes don't bite now - indeed, there is a tiny tax cut for this year.

But the rich will notice tax rises thereafter.

Unlike the National Insurance payments most of us know at the moment, which are capped at about 30,000 a year, the 1% extra national insurance is payable on all income.

It's perhaps a more ingenious tax rise than most speculation had forecast.

Optimism on the economy

But the tax rises do not pay for the whole extra programme of spending.

The chancellor relies a bit on assuming extra economic growth too.

He has increased the trend rate of growth by 0.25% to 2.5% - a move which will add 4bn to tax receipts by 2005-6.

That is, surprisingly, partly put down to faster immigration.

His reputation for caution and prudence remains just about in tact as he will comfortably meet his self-imposed rules on borrowing.

Limits on spending

One important feature of the budget though, is that the generosity offered to the NHS can't be extended to all departments.

While health will get rises of more than 7% over inflation, the other departments will get an average of 2.5% - just enough to hold their share of national income.

In effect, the Chancellor has decided to tax us more, and bet that spending most of his extra money on the NHS will keep the public satisfied.

More increases to come?

Now one big question is whether the chancellor will want to come back and raise more yet money for public spending, or whether this budget represents the chancellor's ambitions for the Parliament.

The Treasury say they could never rule out further tax increases.

But they must be hoping that the planned growth in spending will be sufficient to satisfy all the demands on public spending for the rest of the Parliament.

Like with any chancellor, we will have to wait and see.


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