LONDON (Reuters) - The government on Tuesday raised the basic income tax free allowance for this fiscal year at a cost of £2.7 billion as it tried to end a furore over the abolition of a tax rate that helped low earners.
The changes will all be paid through higher borrowing at a time when the public finances are already very tight and the government plans to issue a record amount of gilts this year.
The move, announced by chancellor Alistair Darling in an emergency statement to parliament, comes as the government’s popularity has slumped following voter anger over higher taxes, the rising cost of living and falling house prices. (more…)