Budget ‘could offer tax cuts to parents’

budget cuts

budget cutsIt can be so frustrating to look at your wage slip at the end of the month and see just how much tax you are having to pay.

With standard pay-as-you-earn tax, National Insurance contributions, not to mention the student loan repayments that some of us are inevitably still paying off, scanning an eye over your earnings can turn into something of a painful exercise.

But a new report from an influential think-tank has suggested that things could be about to get slightly better, as workers like us could be offered fresh tax cuts in the Chancellor's forthcoming Budget.

The Institute for Fiscal Studies (IFS) said that in order to improve the country's economic situation, cuts of up to £20 billion could be made by George Osborne in March.

The group said that there is now a stronger case than ever for VAT or National Insurance reductions, which would do the family budget no end of use.

The IFS report noted that falling inflation could give the Government the chance to raise its borrowing level by up to 1% of GDP. This level of borrowing would enable ministers to finance a temporary financial stimulus and prevent a rise in interest rates, it said.

Welcoming the proposals, Labour's shadow chief secretary to the Treasury, Rachel Reeves, stated: "The independent IFS is right to say that the case for short-term action on jobs and growth - for example through the temporary tax cuts Labour has been calling for - is now stronger and will get stronger still if the eurozone crisis deepens.

"But rather than waiting for things to get even worse, George Osborne should take urgent action in next month's Budget."