Chancellor Alistair Darling has announced in today’s Budget plan that there will be an increase of up to 50% in tax for those earning over £150,000 from next April.

This move is to try and save public finances after his announcement that borrowing will be higher than expected at £175 billion.

It is expected that the economy will continue to shrink by around 3.5% but is expected to begin to mend itself by the end of the year.

Among his announcements, the Chancellor also said that the £2,000 scheme for people trading in 10 year old cars or more for new ones has also been ended.

However, Conservative leader David Cameron criticised the budget saying that “Britain simply cannot afford another five years of Labour”.

The rise in the top tax rate has increased by 5% from what was suggested in the pre-Budget report. It has also been brought in a year earlier than it was initially planned in order to “pay for additional support for people now.”

What Else Should We Expect?

Other plans include an increase in the usual prices: petrol duty will increase by 2p in September and then by 1p per litre above inflation each April for the next four years.

From midnight tonight, alcohol will increase by 2% (around 5p a pint), and from 6pm tonight tobacco duty will also increase by 2%.

The Chancellor predicts that this alone will raise over £6 billion by 2012, which would help to pay for a boost in pensioners’ income (including grandparents that care for their grandchildren) and will also help savers who have ISAs.

Stamp Duty holiday will also be extended to properties that sell for less than £175,000 until the end of the year in order to try and boost the housing market.

Getting People Back Into Work

The Government has also made changes in order to get people back into employment as quickly as possible.

Anyone under 25 who has been without work for a year or more will be offered a job or training scheme place. The Government will also fund the creation or support for 250,000 jobs in deprived areas of the country.

An expansion in sixth form and other further education places will also come into effect, as well as measures to support investment in growth and green industries and help to rebuild the UK’s financial services.

The Chancellor also admitted that the Retail Price Index will likely fall to minus 3% by September, and that unemployment figures have already reached 2.1million – the highest since the current Government came into power in 1997.

Official figures also show that public borrowing has reached a massive £90 billion last year, nearly 6.2% of the national income and much higher than the £78 billion that was predicted in the pre-Budget report.

What Do You Think?

Do you agree or disagree with these changes? Do you think they will help improve the financial situation or make things worse? Do you have any better suggestions? Leave your comments here.