LONDON, March 8 (Xinhua) -- British Chancellor of the Exchequer Philip Hammond on Wednesday announced a hike in tax rates for the self-employed in his first budget, receiving broad support from businesses, but coming under fire from opposition politicians, unions and the self-employed.
Hammond's budget increases heath tax, or called national insurance, by 2 percentage points for lower middle income self-employed workers. This move will affect 2.5 million workers.
A reduction in the tax-free allowance for dividends was also seen as a way of raising more revenue from those in self-employment.
As the incomes of the self-employed have been less taxed than those of employees, some praised the government for making the system more fair on one hand. On the other hand, the budget was criticized for breaking a pre-election pledge.
Terry Scouler, chief executive of EEF, the manufacturers' organization, said: "Current economic indicators offer the chancellor confidence about the resilience of the UK economy, but we remain some way off from possible Brexit uncertainty."
"As such, the chancellor is right to be pragmatic, recognizing the need to avoid jam today and saving the fiscal jam tomorrow to use wisely if the economy encounters turbulence during the process of exit from the EU," he said.
Adam Marshall, director general of the business representative organization British Chambers of Commerce (BCC), said: "Short-term support for firms hardest-hit by business rates rises will be welcomed, along with commitments to technical education, digital connectivity, easier R&D tax credits, and a one-year delay to digital tax reporting for the very smallest firms. Conversely, hikes to dividend taxes and national insurance for the self-employed will be viewed far less positively by entrepreneurs."
Jeremy Corbyn, leader of the main opposition Labour Party, said: "We have long argued for a clampdown on bogus self-employment, but today the chancellor seemed to put the burden on the self-employed worker instead. There has to be a something for something deal. So I hope the chancellor will bring forward extra social security in return."
Simon McVicker of the trade body Ipse, which represents freelancers and independent professionals, said: "When you look at the additional support offered for business rates it appears as if the chancellor is supporting SMEs (small and medium-sized businesses) by hitting entrepreneurs and the smallest of businesses."
Tim Roache, leader of one of Britain's biggest trade unions, the GMB, said: "The squeeze on living standards continues to put an unbearable strain on workers around the country. With wage growth predicted to fall, even more people face being dragged onto the bread line. This should have been a budget to provide a plan for fair pay and support for all workers... Instead, the Tories showed how out of touch they are by failing to help... all the while giving tax breaks to big business."
Jonathan Loynes, chief economist at Capital Economics, an economic data analysis consultancy, said the budget was "something of a non-event from a macro-economic perspective."
Forecast GDP growth for this year was revised up from 1.4 percent to 2 percent, but Loynes pointed out that "the forecasts for later years were revised down as the OBR (the Office of Budget Responsibility, the official independent statistics body) judged that the negative economic impact of Brexit has merely been delayed."
"Meanwhile, although the OBR pulled its forecast for public borrowing this year down sharply from 68 billion pounds (82.96 billion U.S. dollars) to just 52 billion pounds (63 billion dollars), this partly reflects temporary factors which are expected to be unwound next year. As such, the borrowing projections in the later years of the forecast period are largely unchanged from November," Loynes added.