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Gordon Brown bowed out from a decade at the Treasury with a headline-seeking Budget on Wednesday which cut the basic rates of income and corporation tax – but clawed back every penny with a string of revenue-raising measures.
As he tried to lay down the battle lines for the next general election, the chancellor’s parting flourish on his final Budget day was to announce a cut in the standard rate of income tax from 22p to 20p.
But the tight state of public finances meant that Mr Brown was forced to fund the 2p cut in income tax with abolition of the lower 10p rate and an increase in the upper limit on National Insurance contributions – moves which mean that few people will pay much less tax. The Conservatives said Mr Brown’s Budget had been a “con trick”.
Its overall effect will be to raise the tax burden by £11bn annually over the next two years.