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Bygone budgets: March 1999

Chancellor: Gordon Brown
Government: Labour

It was billed in advance as a boring, mid-term budget, but Gordon Brown's third effort met with a rapturous media reception. The once Labour-loathing Sun splashed "Everyone's a winner" on its front page after the chancellor dished out a 10p starting rate for income tax and a 10p starting rate of tax for companies.

The Guardian called Mr Brown's budget "a political masterpiece" and speculated that it was the first move in the government's re-election strategy. A string of measures to appeal to the party's heartlands, including more money for children and pensioners, community computers, taxes on pollution and tougher action against monopolies, were married to distinctly new Labour aspirations, such as reducing income tax and corporation tax.

The applause from unlikely sources was even more unexpected given that it was a redistributive budget. Friendly commentators judged that the modest redistribution was not squeezing the rich, but was achieved thanks to the good performance of the economy in recent years. However, the Treasury was not pleased to find the independent Institute of Fiscal Studies supporting the Conservatives' claims that Labour had increased the overall tax burden on the country.

Income tax
Gordon Brown scrapped the 20p tax band and introduced a dramatic 10p bottom rate of income tax on the first £1,500 of taxable income. He also promised to reduce the basic rate of income tax by 1p to 22p in a year's time. The tax burden on typical family with children was calculated to fall below 20% for the first time in 20 years.

Duty
Duty on alcohol was frozen "this side of the millennium", said the zeitgeist-surfing chancellor. Tobacco excise duty was increased by 5% above inflation, with cigarettes up 17.5p for 20 and cigars up 7.5p per 5.

Pollution tax
A tax on business use of energy would be introduced from April 2001 to help meet Britain's agreed targets, Mr Brown announced. But in a slight departure from previous commitments, he said that the tax would be introduced only after further consultation with industry and would not be so large as to increase the overall taxation of business with the cutting of national insurance.

Entrepreneurs
The chancellor cut corporation tax by 1p to 30p and launched a new enterprise management incentive to provide tax allowances for entrepreneurs. Mr Brown also announced a new research and development tax credit to underwrite almost one third of research and development costs for small businesses.