Tory Budget will hit pockets hard

Press, 28 March 1980, Page 6

Tory Budget will hit pockets hard

NZPA London Britons will be digging deeper into their pockets as a result of the Government’s efforts to right the country’s ailing economy. The Budget presented yesterday by the Chancellor of the Exchequer (Sir Geoffrey Howe) to a rowdy and packed House of Commons was as tough as predicted. The. harshest measures were reserved for the expected areas —petrol, tobacco and liquor—but the Chancellor also dropped a political bombshell that had not been foreseen when he announced a rise of 69c to $2.30 on the cost of prescriptions. About the only humour in his two-hour speech came near the end when he said: “And now I’ve got an idea . . .” Then he paused as the House erupted into laughter. Basic income tax rates will remain Unchanged, but tax allowances have risen in line with inflation, which means a reduction in tax payments of about $1.15 for single people and about $2.71 for married couples. “This is a year of consolidation for taxpayers-,” Sir Geoffrey said. “It is. not a year when sweeping reductions in taxes are possible.” Sir Geoffrey tried to lessen

the impact of some of his harsher measures by announcing rises in pensions, the continuation of a Christmas bonus to pensioners, an increase in supplementary benefits to the elderly and solo parents, and a rise of 18.75 per cent in the child benefit (from $9.02 to $10.90). “I’ve no doubt in the circumstances that I’ve done everything that is reasonable,” he said. The cost of living will rise by 1.2 per cent, thanks to the increased cost of “home comforts.” A gallon of petrol went up 23c to $3.10, 12c was added to the cost of a packet of 20 cigarettes to take them to about $1.65, bottles of whisky rose by $1.15, and 18.4 c was added to a bottle of table wine.

A pint of beer in pubs will cost an extra sc, now 97c.

Sir Geoffrey did not change the rate of value-added tax, which he raised to 15 per cent last year, but he did make motor oil liable to V.A.T., which effectively raises the cost of an oil change in the family car by 15 per cent. All the increased excise duties, he said, would add $3185 million to the Government’s coffers. One of the Government’s

main policy planks is a reduction in Government spending, and Sir Geoffrey said he thought that as a result of his measures that would drop by 3 or 4 per cent in real terms by 198384.

But rises would occur in expenditure on defence (3 per cent), law and order (2.15 per cent), and health (2 per cent). It was while he was saying that health spending would increase that he announced his prescription cost rise. They cost $1.03 when the Conservatives took over last May, and the Government has already announced a 60c increase to be effective from April, the rise to $2.30 will take effect in December, although existing exemptions (elderly, under-16, and low income) will be unaffected.

That announcement brought howls of anger from both sides of the House, and Sir Geoffrey had to sit down while the Deputy Speaker reminded members that traditionally the Budget is heard in silence.

He half-apologised as he read the preface to his measures. “Britain’s difficulties are so deep-seated,” he said, “as to make tough policies inescapable.”