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Fiscal Crises

Britain's Scary Budget


U.K. Chancellor of the Exchequer George Osborne revealed his budget—and it was as painful as promised. The goal is to slash until 2015, when the budget deficit is supposed to be 50 percent smaller than forecast by the previous government. The tightening comes to about $60 billion a year by 2015.

The Proposed Solution

Higher taxes for many:
Value-added tax:
Present:
17.5%
Proposed: 20%
Tax on bank assets:
Present:
0%
Proposed: 0.07%
Capital-gains tax:
Present:
18%
Proposed: 28%

Lower taxes for some:

Corporate income tax:
Present:
28%
Proposed: 24%
New exemptions: 880,000 low earners will be exempt from income taxes

Big cuts in government:

Welfare budget:
Cut of $16.5 billion
Average cut in government costs:
All agencies outside National Health and overseas aid must reduce spending by a quarter before 2015

Data: Bloomberg News, British government, Office of National Statistics, Institute of Fiscal Studies


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