by Rishi Sunak and Jeremy Hunt resist calls for tax cuts
In the first few weeks of his tenure Rishi Sunak earned a well-deserved reputation for trying to avoid clashes with Tory backbencher.
On issues like onshore wind farms and housing targets, the Prime Minister decided he would rather turn back than quarrel with his own rebellious MPs.
Now the gloves seem to come loose.
Chancellor Jeremy Hunt will deliver his first budget next Wednesday and will – with the Prime Minister’s blessing – firmly reject the loud and insistent demands of Tory MPs to include tax cuts.
Among those who want tax rates lowered are Sunak’s two immediate predecessors, Liz Truss And Boris Johnson.
In a speech earlier this month, Johnson called for corporate tax rates – which are set to rise from 19p to 25p in April – to be cut to “Irish levels or lower”.
This echoed calls for a corporate tax cut by Liz Truss, who criticized Sunak’s economic plans in a 4,000-word Sunday Telegraph article in February.
Meanwhile, the Conservative Growth Group – of which Truss is a founding member – has submitted a dossier to the Chancellor calling for tax cuts in the budget.
But despite their lobbying, Hunt and Sunak are determined to stick to the plan outlined in last November’s fall statement, which stressed the need to bring inflation down before a tax cut could even be considered.
Liz Truss and Boris Johnson want taxes to go down.
An ally of the Chancellor told HuffPost UK: “Our overwhelming and overriding priority is halving inflation, which is the number one obstacle to economic growth and raising living standards. You can’t grow the economy when inflation is at 10%.
“Additional borrowing to fund a spending boost or tax cuts would fuel inflation further.
“The best tax cut right now is cutting inflation, because that’s a more insidious tax that eats away at people’s savings and drives up the cost of mortgages and business loans.”
In an interview with GB News, which will air today, Hunt reiterated his desire to lower taxes – just not yet.
He said: “If you tell me, is it my goal that we have the most competitive corporate tax rates? Do I want to make progress? Yes I do.
“We believe in lowering tax rates. But all I would say is you have to do this within a framework that is responsible for public finances. It has to be done in a responsible way.”
Whitehall sources expect a “stable budget” with few major announcements.
Measures are being announced to encourage over-50s to return to work, as well as a fuel tax freeze and a three-month extension of the energy price guarantee to help people cope with rising bills.
But Treasury sources dismissed the findings of a report by the National Institute for Economic and Social Research, which suggested Hunt could have an extra £100billion at his disposal as higher inflation drives up tax revenues.
“We genuinely believe they put a decimal point in the wrong place in their calculations,” a source told HuffPost UK.
Hunt himself may need to come up with some particularly creative bookkeeping if he is to ultimately please the Tory tax-cutters lurking in the back benches.
