UK Conservatives unveil budget

The problem:
– $1.3 trillion debt.
– Budget deficit is 11% of GDP

The planned solution:
– Increase VAT from 17.5% to 20% by January
– Axe treasury department looking into adopting the Euro as the common currency
– Public sector pay freeze
– Child tax benefit freeze for 3 years
– SMB tax rate from 21 to 20%
– plan to reduce corporate tax rate to 24%
– bank levy to be introduced by January
– 28% on capital gains

The UK is facing hard times. Its budget deficit to GDP is second only to Ireland in Europe. Its domestic demand was -1% during 2009 while that of Canada was +2.6%. The Harper government also plans to cut the corporate tax rate to 15% by 2012 while Michael Ignatieff has said that he would freeze corporate taxes at 18%. In October 2009, the IMF had predicted the UK’s net debt to increase to over 90% of GDP while Canada’s net debt position stands under 30% of GDP (and debt-to-GDP ratio about 35%). Canada’s absolute debt stands at $529 Billion and this country’s deficit stands at $56 Billion.

Here is the UK budget released today:

Comments

comments

  • Bailey

    Interesting, increasing the VAT. That would be equivalent to increasing GST.

  • Bailey

    Interesting, increasing the VAT. That would be equivalent to increasing GST.

  • Cycroft

    “Canada‚Äôs net debt position stands under 30% of GDP (and debt-to-GDP ratio about 35%)”

    Is this a fair comparison to the U.K.? According to the CIA Factbook, Canada's debt-to-GDP ratio is about 72% compared to the U.K.'s 68.5%.

  • Liz J

    Sounds like a very Liberal thing to do.

  • East of Eden

    What happened to Ireland. Only a few years ago, it was booming and Ireland was drawing people from North America. And now it is down the tubes?

  • Powell Lucas

    Good grief! 20% VAT. Why not just turn all the earned income over to the government and let them waste it in the same manner as they have done in the past. I know all the lovers of big government think this is a good thing, but for all the people who are in the middle of the road, I hope this is a lesson on what can happen when the nanny state runs rampant.

  • Tedbetts

    Wait a second here. I am confused.

    I thought the opposition controlled spending in minority governments and the government had no choice BUT to increase spending to record levels after breaking historic spending records.

    I thought coalition governments could only drive spending up and result in a dysfunctional Parliament. In fact, Cameron was saying that very thing during the election and Harper has been shouting that since 2008.

    But now you are telling me that saying “I had no choice because we are in a minority government” is just a weak lame-assed pass-the-buck-and-avoid-responsibility excuse showing feeble and visionless leadership?

    On that, I say, we definitely agree.

  • http://twitter.com/ishmaeldaro ishmael n. daro

    The British are doing the right thing. We ought to follow suit in Canada and not be afraid to slash spending as well as raise taxes (like GST) if necessary. The sooner we get back to surpluses and paying down our national debt, the better.

  • Kathy

    Canada's stimulus ends in March 2011. Meanwhile in Ontario and BC, we have the HST to deal with. All of Canada will soon be dealing with increased CPP premiums. I think that we are part of the way to having the UK budget. The rest will follow next spring when the stimulus wears off.

  • Hate Conservatives

    increase the taxes on the common man, decrease the taxes on the corporations. Sell the trickle down effect and convince “dougie” to do his part! Pay up! Er, we're reducing your taxes! (while we ply provinces with billions to implement the HST and tar and feather the liberals as the ones increasing taxes…). Brilliant!

    The conservative way