By Jamie Nelson
Alistair Darling is expected to announce cuts to Value Added Tax from 17.5 percent to 15 percent in his Pre-Budget Report this afternoon.
Gordon Brown promised to use the tax cuts to inject a new vigour and interest into the British Economy.
Brown said: “Simply letting the recession run its course, to say there is no alternative, is not an option.”
The 2.5 percent cut in VAT is to be funded by another of the PBR main aspects – a 45 percent income tax increase to those earning £150,000 a year or more.
Conservative leader David Cameron was critical of the plans for change, calling it a “borrowing binge”.
He said: “ This lot are promising you everything, promising the Earth and they are going to clobber you with an enormous tax bill.”
The plans outlined in the Pre-Budget Report will put borrowing above £100 billion, leading the Conservative party to accuse Labour of creating and storing a “tax bombshell”
Brown rejected the claims and defended the Labour Party and Mr Darling’s stance, saying: “We have seen in previous recessions how a failure to take action at the start of the downturn has increased both the length and depth of the recession.
“Doing too little too late would mean more damage, more deterioration, the loss of vital businesses, a weaker economy, lower growth, eventually greater fiscal problems and in that event, higher interest rates and higher taxes.
“The best way for taxes to be low in the long term is for us to ensure that the downturn is as limited in length and scope as possible.
“And that means help when help is needed. Not when it is too late.”