Belfast Telegraph

Chancellor axes fuel hike and cuts tax for lower paid

By Tony Grew

Northern Ireland MPs asked – and George Osborne delivered – in the Budget.

The Chancellor cancelled the 3p rise in fuel duty set to come into force in September – a tax-hike that had been opposed by all the local parties in recent months.

"For a Vauxhall Astra, or a Ford Focus, that's £7 less every time you fill up," Mr Osborne told the Commons.

The Northern Ireland Office said the average motorist in the province would 'save' £25-a-year as a result of the decision not to up the fuel tax, with van drivers spared £50 and hauliers £750 of extra duty. The cost to the Exchequer of freezing duty over the past two years has been £6bn in lost revenues.

Mr Osborne had a few pieces of good news for taxpayers in a Budget that focused on creating jobs and helping people out of tax, against a background of sluggish growth and increased borrowing.

The personal tax allowance – the amount someone can earn before they start to pay income tax – will be increased to £10,000 from the next financial year.

A total of 618,000 people here will see their tax bill go down – since 2010, more than 75,000 Northern Ireland workers have been lifted out of paying income tax altogether.

New childcare relief measures will support working families by paying for 20% of their childcare costs. There are 80,000 families in the province, with 130,000 children aged under 12, who could benefit.

A new government equity guarantee on 95% mortgages will mean first-time buyers here will only need an average deposit of £5,000.

There will also be National Insurance savings for 25,000 businesses, with 10,000 taken out of employer contributions altogether.

Talks on whether to transfer the power to set corporation tax to the Executive are ongoing. In the meantime, Mr Osborne announced that in April 2015 he will reduce the main rate of UK corporation tax by another 1%, to 20%.

While he is right that it will be the lowest business tax of any major economy in the world, it is still 8% lower in the Republic.

Most Whitehall departments face a 1% cut in their budgets, but the Executive's departmental budgets will only shrink by 0.2%.

The Chancellor is increasing Stormont's overall spending power by £54m over the next two years and there will be an additional £94m of capital spending over the next two years.

However, the Budget came on the day of disappointing unemployment figures. The number of jobless people in Northern Ireland is at its highest in 15 years.

The overall unemployment rate in Northern Ireland is up 0.7% from the previous quarter and now stands at 8.5%.

Labour's Shadow Secretary of State for Northern Ireland, Vernon Coaker, said the Budget "does nothing to help get people back to work".

Almost 60% of unemployed people in the province have been out of work for more than a year.

The Chancellor's solution to unemployment is a new Employment Allowance, which he described as "the largest tax cut in the Budget".

It will work by taking the first £2,000 off an employer's National Insurance bill when they take on new staff.

In all, 98% of the new allowance will go to small firms and it is also open to charities and community sports clubs. But it does not come into effect until April 2014.

Secretary of State Theresa Villiers claimed the Budget "recognises the challenges facing Northern Ireland and the urgent need to renew and rebalance the economy away from an over-reliance on the public sector".

The SDLP's Margaret Ritchie said yesterday's announcements come with a bleak economic outlook. "Families are facing a continuing squeeze on living conditions, welfare is being slashed and the public sector pay freeze has been extended," she said.

Belfast Telegraph


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