Gordon Brown says it is a "tax for a purpose" and is necessary for Britain's economic recovery

Chancellor Alistair Darling announced in his Budget statement on Wednesday the government’s plans to squeeze public spending, with an immediate tax increase of 2 per cent on tobacco and alcohol. Fuel is set to rise by 2 pence per litre on 1st September this year, followed by a 1 pence per litre rise every following April up to 2013.

Patrick King, Tax Principal at accountancy firm MacIntyre Hudson says, “This Budget should have outlined a credible path to rectify the ballooning Government deficit. It was also going to be a budget for jobs, a budget for those innocently suffering the former excesses of others. Yet the most immediate tax increases, in duties for fuel, alcohol and tobacco, will undoubtedly hit those on lower incomes the hardest”
 
A 50 per cent tax rate for earnings over £150,000 was also announced, breaking Labour’s 2005 pledge not to raise income tax for high earners. Mr Darling said it was necessary to help pay for declining revenues, with the government set to borrow £175 billion this year.

He’s also predicted that the economy would return by the end of this year, and will expand 3.5 per cent in 2011. The international Monetary Fund has contradicted this, and predicts the economy will shrink by 4.1 per cent this year and 0.4 per cent next year.