Chancellor George Osborne has said that there will be no temporary tax cuts, saying that the government will cut taxes when it can afford to cut them. Speaking at the Conservative conference, Mr. Osborne said he was “a fan of tax cuts” but “permanent tax cuts”.
Saving Money For The UK
Mr. Osborne will save the average person in England £72 per year, freezing council tax for a second year in 2012-2013, in a plan that will cost £805 million. However, the chancellor has said that the deficit reduction plan will be followed closely despite this tax freeze. This is because the eurozone crisis is the most important issue in terms of sparking UK economic growth.
The Labour party has been pressuring the government to cut VAT and put money into the economy in that way, in addition to the request to eliminate the 50p income tax rate for higher earners.
George Osborne has said that borrowing money to pay off debts and using it to increase public spending or temporary tax cuts would not get the country out of debt, but rather postpone the debts. He called “borrowing too much the cause of Britain’s problems, not the solution.” However, he did suggest, “credit easing”, which would cut costs to borrow money for businesses and allow wider access to loans.
The full proposal will be laid out in November when the chancellor makes his autumn statement. “We will not take that risk. We are in a debt crisis, it is not like a normal recovery. You can’t borrow your way out of debt,” he said.
In addition to the council tax freeze, which comes from an alleged “underspend” in Whitehall, the chancellor also announced more investment into scientific research and the extension of coverage on mobile phones to six million people. The chancellor will be traveling to Luxembourg to meet with European finance ministers and said that the 17 eurozone nations would have to ensure that Greek handles its debts. He also urged that they extend the size of the bailout fund.
This information comes at the same time as ratings agency Standard and Poor’s said the UK’s credit rating would be held at hits highest level, due to its “wealthy and diversified economy”, calling the economy “stable”.