By William Schomberg, William James and David Milliken
LONDON (Reuters) - British finance minister George Osborne said on Wednesday he would miss his short-term budget deficit targets but could afford tax cuts for home-buyers, offering some voter relief from his austerity push ahead of elections.
Osborne said he was sticking to his promise to put Britain's budget back in the black before the end of the decade, hoping that his approach to fixing the public finances will return Prime Minister David Cameron to power on May 7.
He also announced a fresh crackdown on corporate tax avoidance, saying multinationals which artificially move profits abroad would be hit with a 25 percent tax and banks would be able to claim fewer tax breaks for losses dating back to the financial crisis.
In this, Osborne was taking aim at the political ground held by the opposition Labour party, which often claims the Conservative-led coalition favors the rich.
Osborne said Britain's deficit would be bigger than previously expected in the current financial year and in 2015/16 before improving after that and going into surplus in 2018/19.
"Out of the red and into the black for the first time in a generation -- a country that inspires confidence around the world because it seeks to live within its means," he said as he gave parliament an update on the economy and public finances.
In the current year, the budget shortfall was expected to fall to 5.0 percent of gross domestic product. That compared with a forecast of 4.9 percent made in March by Britain's independent budget office.
Britain's economy finally began to recover strongly from the financial crisis in mid-2013. But its growth since then has not yet turned into big rises in pay for workers or for income tax receipts for the government, resulting in the new forecasts for a slightly slower pace of improvement in the public finances.
It is also not clear whether any projected improvement in wage growth will come in time for the election.
PROPERTY TAXES CUT
Aware of fatigue among voters after nearly five years of austerity, Osborne did come up with some rewards.
He overhauled taxes on property purchases, saying 98 percent of home-buyers who have to pay a so-called stamp duty would see their tax bill reduced while buyers of houses worth more than 937,000 pounds would pay more.
He also scrapped an air passenger duty for children, a move that boosted shares in airlines such as EasyJet
For companies, he promised a review of taxes levied on property values, a long-standing complaint of businesses.
Ahead of Wednesday's statement, the government announced more funding for Britain's health service and details of a new road-building programme.
Cameron has previously said he wanted to reward voters with income tax cuts, once the public finances were stronger.
The Conservatives narrowly lag the opposition Labour party in most opinion polls.
But they score more highly on economic policy, and Osborne sought to use Wednesday's high-profile budget statement to ramp up his message to voters that the recovery would only be safe in his hands.
"Now Britain faces a choice. Do we squander the economic security we have gained ... Or do we finish the job ? and go on building the secure economy that works for everyone," he said.
Labour has attacked Osborne for missing the long-term budget targets he set out in 2010. They have also argued strongly that the economic recovery has been unequal.
"People are worse off and the fact is he has failed to balance the books in this parliament," Labour's would-be finance minister Ed Balls said in reply to Osborne's speech.
(Additional reporting by the UK bureau Editing by Jeremy Gaunt)