George Osborne has delivered his 2012 Budget to the Commons, and as expected the 50p top rate of tax is being cut to 45p, a measure which will come into effect a year from now.
"We are earning our way out of trouble," the Chancellor said at the conclusion to his speech, insisting that the top rate of tax - introduced by the last government - had only encouraged tax avoidance and raised less than a third of the amount previously expected.
The chancellor also performed a major U-turn on cuts to child benefits for middle-incomes - but has angered pensioners by freezing their personal tax allowances.
FULL BUDGET COVERAGE
After the most heavily trailed budget in history, the rabbit in the hat moment we were all waiting for came not in the form of a mansion or tycoon tax but instead in a tax whammy for pensioners.
With the stroke of his pen (or at least a couple of lines of prosaic text in the red book) 4.5m pensioners, nearly half of all pensioners, will be worse off in real terms.
Over £1billion of the £3 billion the chancellor is seeking to raise following today’s budget is coming straight from pensioners. This is the biggest tax rise on pensioners in recent memory and stretches the definition of all families ‘fairly sharing the burden of the deficit’ to breaking point.
I wrote earlier this week that one response to the recession had been to try and pit generation against generation, but now it seems that the chancellor, has expanded his sights so pensioners too are set to feel the squeeze get much, much tighter.
Already affected by low rates of return on savings, higher VAT and ever-rising fuel costs, today’s announcement, - already dubbed by some as the Granny poll tax will hit Gransnetters hard. It’s estimated to amount to anywhere between £63 cut next year to a £291 cut in potential income for older pensioners.
Given the other big headline from this budget is tax cuts for millionaires, the chancellor is in danger of setting himself against a new era of grey activism keen to ensure changes to all families’ incomes are fair.
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