British Finance Minister Gordon Brown announced on Wednesday that he would cut the basic rate of income tax in Britain from 22% to 20% in April 2008.
Brown, outlining what is widely seen as his final budget before becoming prime minister later this year, added that it was “the lowest basic rate for 75 years” in Britain.
Rounding off his near hour-long budget speech, the chancellor of the exchequer told Parliament: “We are able to hold to our pledge not to raise the basic rate of income tax.
“Indeed to reward work, to ensure working families are better off and to make the tax system fairer, I will from next April cut the basic rate of income tax from 22 pence to 20 pence [in the pound].”
Brown added that the lower rate of 10% would be scrapped, while the point at which people started paying 40% income tax — the top rate — would rise to £43 000 from April 2009.
Brown had originally planned to set the limit at £38 000.
“Having put in place more focused ways of incentivising work and directly supporting children and pensioners at a cost of £3-billion a year, I can now return income tax to just two rates by removing the 10 pence band on non-savings income,” chancellor Brown said.
“I can also announce that the point at which people start paying top rate income tax will, from April 2009, not be annual income of £38 000 but £43 000.”
Prime Minister Tony Blair has said he will step down by September and many commentators predict Brown will replace him in June or July. — AFP