Tax Cuts Spark Shouting Match in Commons

Treasury chief Nigel Lawson announced Britain’s first budget surplus in nearly 20 years today and was shouted down by opposition legislators in one of the most unruly annual budget presentations in parliamentary history.

The deputy Speaker twice suspended the sitting during Lawson’s speech, and opposition socialist Laborites chanted “Shame, Shame” as he announced huge tax cuts for the rich.

Lawson said he was slashing the top tax bracket from 60% to 40%.

A Scottish legislator, Alec Salmond, was expelled after calling the budget an “obscenity,” with tax cuts instead of extra spending on health and welfare services.

Commons Suspended

In an unprecedented development, the Commons was suspended while legislators voted overwhelmingly to expel Salmond.

Lawson reduced the basic rate of tax from 27% to 25%, and in the most sweeping reforms cut Britain’s six tax brackets to just two--25% and 40%.

The measures were the most drastic since Prime Minister Margaret Thatcher came to power on a platform of cutting taxes, encouraging private enterprise and curbing inflation and state spending.

The budget surplus is due partly to higher-than-anticipated revenues from hiked wages and company profits--which together yielded about $5.5 billion more than forecast.

Top Rate at $76,200

Any big cut in the top tax rate would mean huge individual savings for the relative handful--140,000 taxpayers--who pay it. The top rate is levied on income above $76,200 a year.

In line with a string of trim, low-deficit budgets since Thatcher won power in 1979, Lawson originally predicted a $7.4-billion deficit in 1988-89, and revised that to $1.85 billion last autumn.

London’s Sunday Telegraph said the budget would be a moment to relish for Lawson, “advocate of fiscal rectitude and monetary restraint.”