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NEWS Wednesday, 10 March, 1999, 09:53 GMT
Brown targets income tax
Chancellor Gordon Brown has cut a swathe through income tax bringing the basic rate down to 22p and introducing a 10p starting rate.

He promised there would be "no rise in alcohol duty this side of the millennium" - but cigarettes went up by 17.5p per packet.

The new starting rate of income tax will take effect from April this year. The 1p cut in the basic rate will come in a year later.

"It is prudent for people to get the benefit of the 10p starting rate now," Mr Brown said in his 65-minute speech.

Nearly two million people would have their income tax bill cut in half as a result of the 10p rate, he promised.

Radical changes to the structure of benefits aimed at families and children were also included in the Budget.

Marriage couples' allowance was replaced by a family tax cut to increase the amount going to families with children.

Describing it as a "tax cut for families", Mr Brown said the children's tax credit would be worth 416 a year - meaning "the typical family with children will be over 200 better off".

Mr Brown increased child benefit to 15 a week from April 2000 for the first child and 10 for further children, but said it would not be taxed.

"Support for children as a result of all the measures I am announcing will be twice as high by the end of this parliament as at the start," he said.

The chancellor fulfilled another prediction by withdrawing mortgage interest tax relief.

Conservative leader William Hague branded Mr Brown "the pickpocket chancellor who shakes your hand with a smile after he has skilfully removed your wallet".

Mr Hague said: "As ever the most interesting things the chancellor had to say were in the things he didn't say."

The chancellor had a series of further measures for business to unveil in his annual finance bill.

A starting rate for small business tax of 10% was another key Budget change.

Mr Brown said this would benefit every company making profits of up to 50,000.

The chancellor set out further tax cuts aimed at stimulating investment by business through e-commerce.

These included "targeted tax cuts and public investment to equip all our companies and all our people for the newest and most decisive economic challenge of the 21st century - mastering information technologies, from the PC to the Internet, from e-mail to e-commerce".

The chancellor allocated 500,000 to start a 1.7bn computer initiative for schools. He set out targets to connect 32,000 schools to the Internet and train 370,000 teachers in using computers within three years.

As predicted, petrol duty will go up immediately by 6% for leaded fuel and 4.25% for unleaded.

Vehicle Excise Duty for smaller cars from 1 June will be cut by 55. VED for other vehicles rises in line with inflation.

The VAT rate remained unchanged, as did stamp duty.

The last Budget of the 20th century would "leave behind sterile conflict" between governments of the left and right and "encourage a dynamic Britain of enterprise and fairness", the chancellor said.

This had been made possible by previous changes aimed at bringing stability, he said.

Inflation would stay at 2.5% for the next two years, the chancellor forecast.

He confirmed his previous growth forecast at 1% to 1.5% for 1999 and 2.25% to 2.75% the following year.

Corporation tax will be cut from 31p to 30p from 1 April and small companies tax received a similar reduction taking it to 20p from the same date.

The Budget surplus was put at 2bn for the year 2000 and forecast to rise to 11bn by 2005

During his Budget speech, Mr Brown followed his own past precedent and drank mineral water.

Other chancellors, including Ken Clarke, have preferred whisky. Further back, Benjamin Disraeli drank brandy with water, while his great Victorian rival William Gladstone preferred sherry with a beaten egg.

Your Views - Have your say on the Budget

Gordon Brown: "A Budget to encourage a dynamic Britain"
BBC Chief Political Correspondent John Sergeant: From unbending Iron Chancellor to everyone's flexible friend
Gordon Brown: Child benefit will go up
Gordon Brown: Long-awaited 10p tax band to start this year
Shadow Cancellor Francis Maude: The stealth tax chancellor delivers yet another stealth tax budget
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09 Mar 99 | NEWS
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