The good news... and the bad
Some good news has emerged from the Treasury tonight. The Budget will take 880,000 people out of the tax system and give basic rate taxpayers a tax cut of £200 per year.
The bad news comes tomorrow when it will become clear that overall people in all income groups will pay more as a result of other tax rises, spending and benefit cuts and limits to public sector pay and pensions.
"Tough but fair" is how the chancellor will describe the package of measures he unveils to cut Britain's budget deficit. He will publish figures designed to show that the rich will pay more than the poor. Normally it's been left to our old friends at the Institute of Fiscal Studies to produce that sort of distributional analysis. The Treasury's figures cannot and will not include the effects of cuts in public services on different income groups since the Budget will only announce the headline spending totals for the next four years with the detail of what exactly is to be cut not decided until the Spending Review in October.
Tomorrow's tax cut will come in the form of an £1,000 increase in the amount that anyone can earn before paying tax - taking the annual tax allowance for basic rate tax payers to £7,475. The benefit will be clawed back from top-rate taxpayers. The chancellor must find £3.5bn to pay for this measure in addition to the billions needed to cut the deficit.
The proposal to cut income tax allowances was first made by the Liberal Democrats and was adopted by the coalition government instead of the Conservatives proposal to stop Labour's planned rise in National Insurance for anyone earning over £20,000 a year.
Labour have always insisted that any tax cut was irresponsible and could not be afforded.
If the chancellor increases VAT in his Budget - which is far from certain - the opposition will argue that it will hit the poorest people in our society the hardest - pensioners, the unemployed and those who do not pay income tax at all.