UK's Cameron rules out big tax cuts at budget

Prime Minister David Cameron ruled out big tax cuts at next month's budget, confirming in a Sunday newspaper interview that his focus remained on reducing Britain's budget deficit.

Cameron's Conservative party and their Liberal Democrat allies set out a five-year plan to almost eliminate Britain's budget deficit in an emergency budget in June last year.

Sales tax rose at the start of the year and an increase in payroll taxation will come into effect in April, and some legislators on the right of Cameron's party are upset he has not made a clear commitment to cutting taxes in future years.

"I would love to see tax reductions. I'm a tax cutting Tory (Conservative) and I believe in tax cuts, but when you're borrowing 11% of your GDP, it's not possible to make significant net tax cuts. It just isn't," he told the Sunday Telegraph newspaper.

"It's no good saying we're going to deal with the deficit by cutting spending, but then we're going to make things worse again by cutting taxes. I'm afraid it doesn't add up," he continued in an early edition of the paper.

Separately, a report in the Sunday Times newspaper said that Britain's finance ministry was looking at reducing tax breaks for people who are resident in Britain but claim their main financial interests remain overseas.

So-called 'non-domiciled' taxpayers avoid paying tax on money earned from overseas work and investments, and this has made Britain an attractive destination for businessmen such as steel tycoon Lakshmi Mittal and Chelsea football club owner Roman Abramovich.