Prime Minister Gordon Brown's government used its last budget Wednesday before a looming national election to take from the rich and give to the poor, raising accusations it is invoking a class war as it attempts to win over recession-weary voters.
With just weeks to go before the national poll, the ruling Labour Party said it was hiking taxes on the wealthy to pay for breaks given to lower income earners such as scrapping house purchase duties for first-time home buyers.
As Labour wallows behind the main opposition Conservative Party in the opinion polls, Treasury chief Alistair Darling's budget statement was light on financial detail but heavy on political rhetoric.
"This will be a budget to secure the recovery, tackle borrowing and invest in our industrial future," Darling told lawmakers in the House of Commons. "It will continue targeted support for business and families where and when it is needed."
At the center of that promised support was a headline-grabbing pledge to drop so-called stamp duty on house purchases made by first-time buyers on properties costing up to 250,000 pounds ($370,000).
That measure will be funded by a doubling in the stamp duty to 5 percent on all properties costing over 1 million pounds from the start of April.
In other Robin Hood-like measures, Darling said an increase in income tax would not hit anyone earning less than 25,000 pounds a year, but there would be significant tax increases and reduced personal allowances on those earning more than 150,000 pounds a year.
Darling attempted to downplay the moves, saying they were not made "out of dogma or ideology" but a determination to ensure the country's "overall tax regime remains competitive."
But commentators in class-conscious Britain were quick to jump on the implications: the right-wing Daily Mail newspaper blared: "Now it's a class war! Darling hammers the better off with tax rises" referring to "punishments" for the better off.
And in a further dig at the Conservatives' blue blood, Darling announced that Britain had signed a tax information exchange with three offshore tax havens, including Belize where the Tories' controversial multimillionaire Deputy Chairman Michael Ashcroft is based. Ashcroft's admission earlier this month that he has non-domiciled tax status, meaning he doesn't pay U.K. taxes on foreign earnings, caused the opposition much embarrassment.
The rhetoric seemed aimed at defining differences between Labour and the Conservatives ahead of the election, as they continue to bicker over whether economic stimulus should be curbed quicker to get record debt levels under control.
Conservative leader David Cameron, who has pledged to announce a new budget within weeks if his party is elected in the poll expected on May 6, said Britain needs a credible plan to deal with its debt starting immediately "to show the world we are back open for business."
"We need real action to get our economy moving — and urgently."
Darling stuck by Labour's contention that doing so would risk a recovery that "is still in its infancy" and announced a 2.5 billion pound ($3.7 billion) one-off growth package as a centerpiece of the budget.
The budget plans shows current expenditure rising from 604.6 billion pounds ($901.8 billion) in the current financial year, which ends on March 31, to 644 billion pounds ($960.6 billion) in the next year and 662 billion pounds in 2011-12.
The government maintained its forecast for economic growth this year of 1-1.5 percent, but lowered next year's forecast slightly to 3-3.5 percent from 3.5 percent. Most economists still consider that optimistic.
Darling did lower government's forecasts for the budget deficit out to 2014-15, citing stronger tax receipts from the recent tax on bankers' bonuses and strong sales tax contributions. But that was not enough to appease ratings agencies that have warned over the country's triple-A government debt rating, which allows the country to borrow relatively cheaply.
Borrowing would reach 167 billion pounds ($249 billion) this year, Darling said, down from the previously forecast record 178 billion pounds. A series of reductions in the next few years would leave the deficit 100 billion pounds lower in 2014-15 than previously thought, he added.
"In our opinion, the projected path of deficit reduction still renders the public finances vulnerable to shocks given the uncertainty over the U.K.'s medium-term economic prospects," said David Riley, Fitch's Global Head of Sovereign Ratings.
Elsewhere in the budget, Darling unveiled a 2 billion pound "green bank" to fund environmentally friendly public sector projects and promised 11 billion pounds of "efficiencies" across public departments by 2012-2013.
He also ordered two part-nationalized banks — the bailouts of which were responsible part of Britain's deficit — to loan 95 million pounds to small businesses.
He pledged 20,000 new university places and promised more support for the large numbers of unemployed youth affected by the recent recession — measures likely to appeal to younger voters.
A likely unpopular move was the decision to increase duty on alcoholic cider by 10 percent above inflation from midnight on Saturday, an attempt to crack down on the cheap alcohol fueling Britain's booze culture.
The overall verdict from most economists and lobby groups was that real analysis won't be possible until after the general election when whichever party wins will be more upfront on spending plans.
"At the end of the day, the reality is that the postelection Budget, which will be much harsher, is the only event of any importance," said Nick Hopkinson, Director of Property Portfolio Rescue.
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