Finance Minister George Osborne is expected to announce Monday that the UK will be freezing the tax that households are required to pay in order to fund local services. The government will allegedly fund the tax cut using more than 800 million pounds that went unused by government departments this year.
This may come as a surprise to many, as the Conservative-Liberal Democrat coalition party that has been in authority since mid-2010 has primarily been known for raising taxes and cutting spending in an effort to reduce the budget deficit before the next general election in 2015.
While government officials admit that there is very little that can be done to immediately stimulate economic growth, the coalition has been working to develop strategies that will allow them to cut taxes and reduce some of the financial stress placed on UK households before the next election.
In a recent speech given by Osborne, he stated that one of his main agendas is helping families and pensioners cope with daily living expenses. Despite his seemingly positive intentions, many skeptics criticise Osborne and the current coalition government for not developing a comprehensive growth strategy, and instead promoting a deficit plan that could be damaging the British economy.
If implemented the 2012-2013 tax freeze would fulfill one of the government’s manifesto promises, and could potentially save the average British household more than 70 pounds per year. The government is expected to pay councils approximately 2.5% of the tax rise, while police and fire agencies are expected to receive approximately 3% of the tax rise.
Although the tax freeze may seem to be a positive move for consumers and households, it could also leave very little additional cash to support an economy that is already struggling.
