The Government has revealed plans to cut the national deficit, including a rise in VAT to 20 per cent, but emphasised that the aim is to move away from a budget based on “household debt and government spending.”
Speaking before Parliament, the Chancellor announced that the policies of the former government had forced a rise in VAT from January 4th 2011.
However, he did also announce a number of measures to try and stimulate growth in small businesses. Corporation tax will see successive reductions of one per cent year-on-year for the next three years, while small corporation tax will be reduced to 20 per cent from April next year.
He also announced that the Government would abandon the phone levy proposed by Labour, denouncing the scheme to stimulate broadband growth as “archaic” opting instead to fund it through private investment coupled with Government sponsorship.
In addition, he said that the Government would not be pushing through with the “ill advised” tax breaks for the UK video games industry.