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banner Wednesday, 7 March, 2001, 15:06 GMT
Brown to reveal Budget tax cuts
Gordon Brown
Gordon Brown is gearing up for his pre-election Budget
Chancellor Gordon Brown has taken his seat in the House of Commons where he is set to unveil his Budget.

Mr Brown briefed ministers on his Budget, which is widely expected to include targeted tax cuts worth up to 4bn, on Wednesday morning.

Anything Gordon Brown gives back now will be tiny by comparison with what he has already taken

Michael Portillo
He is understood to have promised them a cautious Budget with tax cuts carefully targeted at Labour's "priority areas", including pensioners, savers, working women and less well-off families.

The Budget, which is expected to be the last before the general election, will be unveiled to MPs at 15.30 GMT.

Mr Brown told ministers that the central message of his Budget would be economic stability.

He has played down hopes of a pre-election giveaway in recent weeks.

However, he is expected to say that surplus Treasury funds will allow targeted tax cuts and increased spending on education and health.

He is thought to be planning a series of family-orientated measures including a so-called "baby bonus" that could see parents receiving a one-off payment of several hundred pounds.

Brown's Budget options
Extension of 10p tax rate or increase in personal allowances
More generous children's tax credit
Baby bonus of up to 300
Increase in tobacco and alcohol duty
Reform of stamp duty on property sales to regenerate inner-cities
End to betting tax
Extension of maternity leave
There is also speculation that maternity pay could rise and that the level of new child tax credits might be increased.

Although a penny across-the-board reduction in the basic rate of tax has been widely dismissed as unlikely, the chancellor may tinker with the 10p tax starting rate, to benefit the low-paid.

That could mean an increase in the amount of earnings currently taxed at the lower rate.

The issue of taxation is likely to figure prominently in any Tory response to the Budget - and in the subsequent election campaign.

On Tuesday right-wing think tank the Centre for Policy Studies accused Mr Brown of imposing 45 new "stealth taxes" - worth a net 36bn to the Treasury.

The government will be also wary of sparking renewed protests by the fuel lobby of the sort that crippled the country in September.

Balancing act

Mr Brown will try to balance that with the government's commitments to the environment - especially after Tuesday's "green" speech by Prime Minister Tony Blair.

It is already known that the chancellor will announce a minimum 2p duty cut on ultra low sulphur petrol (ULSP) and the Treasury has indicated this will temporarily be extended to unleaded petrol because of a lack of availability of ULSP.

Michael Portillo
Portillo attacked levels of taxation
Another group that the government will want to please is pensioners.

The "grey army" was incensed last year that pensioners got just 75p more per week in the basic state pension.

That decision prompted widespread protest - most embarrassingly at Labour's annual conference where delegates snubbed the government and called for the link between pensions and earnings to be restored.

Mr Brown may well be about to announce measures to supplement the new pensioner credit.

Tax breaks for savers?

In addition there may be tax incentives for savers.

Almost inevitably, smokers are going to see an increase in the duty they pay on tobacco products.

Labour should not be cutting taxes when they have so clearly failed to sort out our hospitals, schools and pensions

Matthew Taylor
Shadow chancellor Michael Portillo has unveiled a Tory poster warning that any tax cuts would be "for a limited period only".

He said: "Anything Gordon Brown gives back now will be tiny by comparison with what he has already taken.

"Gordon Brown's commitment to a course of spending that out-strips what the nation can afford means taxes would have to go up again and again if Labour were re-elected."

Mr Portillo also confirmed that the Tories were committed to cutting 3p a litre off duties on petrol and diesel on top of whatever Mr Brown announced in his Budget.

Liberal Democrat Treasury spokesman Matthew Taylor said: "Labour should not be cutting taxes when they have so clearly failed to sort out our hospitals, schools and pensions."

Former Tory chancellor Ken Clarke told BBC News Online he thought the economy was going to slow down.

He added that increased spending on public services may have to be reduced in the years ahead.

"He [Mr Brown] has committed himself to heavy spending programmes over the next three to four years which on any view will create a deficit in two years."

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See also:

12 Feb 01 | UK Politics
Parties bow to grey power
24 Feb 01 | Wales
Fuel protesters renew action
06 Jan 01 | Wales
Fuel campaigners end protests
05 Mar 01 | Business
Budget to target working mums
10 Nov 00 | UK Politics
Brown set to axe betting tax
02 Nov 00 | Pre budget report
Brown's balancing act
07 Mar 01 | UK Politics
Brown to target families and the old
06 Mar 01 | UK Politics
Blair pitches for green vote
05 Mar 01 | Business
Minimum wage up 10%
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