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U.K. to unveil major tax-cut stimulus package
By William L. Watts, MarketWatch
Last update: 11:09 a.m. EST Nov. 23, 2008
Comments: 2
LONDON (MarketWatch) - The British government is expected to unveil a large economic stimulus package Monday consisting largely of temporary tax cuts, as it aims to reduce the blow from economic woes amid the sharp global downturn.
News reports said Chancellor of the Exchequer Alistair Darling's pre-budget report, due out Monday, will feature a reduction in value-added tax, or VAT, charged on most goods and services from 17.5% to 15% -- the lowest level allowed under European Union rules.
In an interview on BBC One's "The Politics Show," U.K. Prime Minister Gordon Brown refused to comment on details of the plan, but said it was crucial for the government to take action now.
"To do nothing ... would be irresponsible," Brown said. "To take action would be to prevent things getting worse."
The cut in the VAT rate is likely to reduce revenues collected by the U.K. Treasury by around 12.5 billion pounds ($18.6 billion) a year, according to the Guardian newspaper.
Brown emphasized that the measures are part of a coordinated efforts by governments around the world, including the other European powers and the U.S., to provide economic stimulus.
The Labour government's expected plans have been sharply criticized by the opposition Conservative Party, who contend that taxes will need to be raised in the future to offset tax cuts now.
Consumers are unlikely to increase spending due to worries they will face a "tax bombshell" in the future, Conservative Party leader David Cameron said in a BBC interview.
The plan is also expected to include

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