Chancellor Alistair Darling defended plans today to borrow billions of pounds to help Britain out of recession as opposition Conservatives said people earning more than £19,000 sterling would end up paying more tax.
In his pre-budget report yesterday, Darling told parliament he would cut VAT and extend help for small businesses, low earners and households in a package worth some £20 billion - over 1% of gross domestic product.
But he said tax cuts now would mean future tax rises, including an increase in income tax for high earners, and a surprise increase in payroll tax on employers and workers for all but the lowest earners - deferred until after the next election.
'I believe that it is the right thing to do to support support the economy now,' Darling told GMTV.
To pay for the package, Darling said public borrowing would balloon to £118 billion in the next financial year, way above the £38 billion he forecast in March.
In a series of media interviews today, Darling said those earning more than £100,000 a year would bear the brunt of the tax increases to help pay for the rescue package.
But the Conservatives said that the plan to raise national insurance by 0.5% would hit everyone whose salaries exceeded £19,000.
Shadow Chancellor George Osborne said the 'borrowing binge' would push national debt towards £1 trillion and that the government were gambling with public finances. He said the Tories would have done more to stimulate the economy by getting banks to lend to businesses.
