STORY: UK unveils new budget with tax hikes of 40 bln pounds
SHOOTING TIME: Oct. 30, 2024
DATELINE: Oct. 31, 2024
LENGTH: 00:02:45
LOCATION: London
CATEGORY: Economy

SHOTLIST:
1. STANDUP (English): ZHAO XIUZHI, Xinhua correspondent
2. various of Britain's Chancellor of the Exchequer Rachel Reeves
3. SOUNDBITE 1 (English): STEVE NOLAN, Economist at Liverpool John Moores University
4. various of streets in London
5. SOUNDBITE 2 (English): STEVE NOLAN, Economist at Liverpool John Moores University

STORYLINE:

The Labour Party government unveiled its first budget on Wednesday, outlining plans to raise taxes by 40 billion pounds (51.9 billion U.S. dollars) a year.

STANDUP (English): ZHAO XIUZHI, Xinhua correspondent
"Britain's Chancellor of the Exchequer Rachel Reeves on Wednesday gave the budget statement in the House of Commons. This was the Labour Party's first budget in 14 years and also the first since it came into power after the general election in July."

Despite previous assurances not to raise taxes on working people, the chancellor announced a rise in employers' National Insurance (NI) contributions from 13.8 percent to 15 percent, effective April 2025. Also, the threshold at which employers begin paying NI for employees will be reduced from 9,100 to 5,000 pounds annually.

Together, these changes are projected to generate 25 billion pounds per year for the government.

Capital gains tax will also see an increase, with the lower rate rising from 10 percent to 18 percent and the higher rate from 20 percent to 24 percent, Reeves said.

The inheritance tax threshold will remain frozen, allowing up to 325,000 pounds to be inherited tax-free.

The national minimum wage for full-time workers aged 21 and over will rise by 6.7 percent to 12.21 pounds an hour, while that for 18 to 20-year-olds will rise from 8.6 to 10 pounds an hour. The chancellor also noted the income tax and NI contributions thresholds will be unfrozen starting in the 2028-29 fiscal year.

Additional tax changes include higher taxes on smoking, the introduction of VAT on private school fees, and the abolition of the non-dom tax regime beginning in April 2025.

SOUNDBITE 1 (English): STEVE NOLAN, Economist at Liverpool John Moores University
"The chancellor, Rachel Reeves, announced that there was going to be 40 billion (pounds) of tax rises. Now, she framed this in a position of being extremely critical of the previous government in terms of how they'd manage the finances. 40 billion increase in tax rises was definitely at the top end of people's expectations for what was going to happen. So there's a bit of concern about the impacts of business on this budget. So basically, to start with, employers are going to have to pay more in tax from April of next year. This has come in line with an increase in the National Living Wage, which is basically the minimum wage within the UK. There's a concern that both of these are going to hit the bottom line for small businesses."

In her budget statement, Reeves stressed the importance of investment, saying that the government will deliver "a boost to public investment by over 100 billion pounds over the next five years across roads, rail, schools and hospitals whilst keeping debt on a downward path."

Alongside the budget, the independent Office for Budget Responsibility (OBR) projected that UK inflation will average 2.5 percent this year, 2.6 percent in 2025, and gradually decline to 2 percent by 2029, Reeves said in her speech.

The OBR also forecasts real GDP growth of 1.1 percent in 2024, two percent in 2025, and 1.8 percent in 2026.

SOUNDBITE 2 (English): STEVE NOLAN, Economist at Liverpool John Moores University
"It's always difficult on the day of a budget to really get to grips with who has won and who has lost from this kind of budget. You really need to have a longer term to look at the distribution effect. Even though there is a big increase in spending, that needed to happen to maintain the level of services. There was no real positive hook that I think the government was able to point towards to say that this is going to hurt, that this is definitely going to work. So in that respect, I think the mood music around this government, especially economically, is going to be fairly sour for some time to come."

Xinhua News Agency correspondents reporting from London.
(XHTV)