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Osborne Says Austerity Plan Can Be Done Without Tax Increases

July 11 (Bloomberg) -- U.K. Chancellor of the Exchequer George Osborne said his deficit-reduction plan can be achieved without raising taxes after the May 2015 election.

“We have set out the path of fiscal consolidation in the budget, it says this is going to be done through expenditure,” Osborne told reporters in London today. “There is no need for tax rises to contribute to that fiscal consolidation.”

Weaker-than-forecast economic growth and tax receipts have forced Osborne to extend his budget-cutting program to the year starting April 2017. He had planned to balance the budget this Parliament. The independent Institute for Fiscal Studies said in June that taxes will need to rise by 6 billion pounds ($9 billion) after 2015 to meet the government target of an 80 percent to 20 percent split between spending cuts and tax increases.

“Tax increases are not required,” Osborne told Parliament’s Treasury Committee today. “It can be achieved with spending reductions.” He also said tax any cuts should come from growth in the economy, not from increased borrowing.

“I’m a low-tax Conservative who believes it would be good to have lower taxes, but I think they need to be sustainably lower,” he said.

Osborne told reporters tax breaks for married couples will be announced in his autumn statement, underscoring the pressure on the Conservative leadership to keep rank-and-file lawmakers happy ahead of the election. Some Tories say the party is losing support partly because it isn’t doing enough for traditional families.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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