LONDON Chancellor Alistair Darling defended plans on Tuesday to borrow billions of pounds to help Britain out of recession as Conservatives said people earning more than 19,000 pounds would end up paying more tax.
In his pre-budget report on Monday, Darling told parliament he would cut VAT and extend help for small businesses, low earners and households in a package worth some 20 billion pounds -- over one percent of gross domestic product.
But he said tax cuts now would mean future tax rises, including an increase in income tax for high earners, and a surprise increase in payroll tax on employers and workers for all but the lowest earners -- deferred until after the next election.
"I believe that it is the right thing to do to support the economy now," Darling told GMTV.
To pay for the package, Darling said public borrowing would balloon to 118 billion pounds in the next financial year, way above the 38 billion pounds he forecast in March.
In a series of media interviews on Tuesday, Darling said those earning more than 100,000 pounds a year would bear the brunt of the tax increases to help pay for the rescue package.
But the Conservatives said that the plan to raise national insurance by 0.5 percent would hit everyone whose salaries exceeded 19,000 pounds.
Shadow Chancellor George Osborne said the "borrowing binge" would push national debt towards one trillion pounds and that the government were gambling with public finances.
He said the Tories would have done more to stimulate the economy by getting banks to lend to businesses.
"We have got to get lending going in this economy again, you have got to get credit to small businesses, that is where the action is needed, not, frankly, taking a huge risk with the public finances," he told BBC Radio.
He also said the government should ensure that interest rate cuts were passed on by banks to businesses.
But Darling said the Tories "would walk way from people, leave them high and dry, let them sink or swim," adding: "I am not prepared to take that risk with peoples' lives."
"There is a choice -- you either have a government that will help people at this time, or a government who walks away on the other side," Darling said.
(Reporting by Michael Holden, editing by Kate Kelland)